Looking to Buy EUR/GBP as It Follows the Elliott Wave Pattern Upwards
EUR/GBP has been trading in a downtrend for more than a month, losing 340 pips in the process from top to bottom. The reason for this has been the resilience in the GBP. Although, the GBP has reversed down in the last few days and EUR/GBP has reversed up.
The economic data has deteriorated in the UK recently and the BOE chairman Carney acknowledged it. He also played down rate hike expectations yesterday saying that there’s no fixed schedule for rate hikes. The market was fully pricing in a rate hike in May, but now the odds have decreased.
So, I think the bigger trend is changing for EUR/GBP and the price action of the last three days is telling us the same thing. This pair has moved up in waves, the first one taking place on Wednesday, then there was a consolidation. We saw the second leg up north yesterday, followed by the consolidation and the retrace down this morning.
Always, wait for a retrace before opening a position
Normally, we should see the third leg of the uptrend now. That would complete the Elliott Wave Pattern. So, we sho9zuld go long now right? The H1 chart is surely pointing up. The retrace is complete with stochastic being oversold, the 50 SMA (yellow) is providing support and the previous H1 candlestick closed as a hammer, which is a reversing signal.
Now the price is really starting to reverse higher as the current bullish candlestick shows. Although, the H4 and the daily charts are overbought now, so that’s what’s keeping me on the sidelines. But, I really think the trend is changing for EUR/GBP, so if I get a better price lower I’m sure I will open a buy forex signal. Now, let’s watch the price action.
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