Shorting the Pullback on EUR/GBP at the 20 SMA

EUR/GBP has been on a strong bearish trend for 2 weeks but it's retracing higher today, which we see as a good chance for shorts.

A pin candlestick below the 20 SMA is a reversing signal

EUR/GBP had been trading on a range for several weeks since early December, but in the last two weeks it finally decided to make a move and unsurprisingly the move came to the downside. The Euro is still trading sideways, while the GBP has entered a bullish trend climbing around 400 pips during the last two weeks as as odds of a no-deal Brexit diminish.

As a result, EUR/GBP has lost around 400 pips as well during this period. Although, the EUR/USD is continuing in the footsteps of last Friday, climbing higher today, while GBP/USD is retracing lower and it’s around 60 pips lower from the highs on Friday evening.

This has led to a bullish retrace in EUR/GBP today and is seems like this pair is finding resistance at the 20 SMA on the H4 chart. The 20 SMA has been pierced a couple of times but this moving average doesn’t work exactly to the pip as you can see from the history of the last two weeks.

So, we can’t consider this a proper break yet. The stochastic indicator is almost overbought now which means that the pullback higher is complete, while the previous H4 candlestick closed as a doji which is a reversing signal aftr the pullback higher. So, we decided to go short on this pair a while ago. Let’s see if the sellers will be able to resume the bearish trend now.

ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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