Getting Ready to Sell EUR/GBP When the Retrace is Complete
The GBP surged more than 500 pips higher in October, after UK Prime Minister Boris Johnson and the EU reached a Brexit deal. As a result, EUR/GBP made a 180 degree turnaround and has been bearish since then. During the first two weeks of the decline, the 20 SMA (grey) was providing resistance, as the pace was pretty strong.
Then, the trend slowed and the 50 SMA (yellow) and 100 SMA (green) turned into resistance, once they caught up with the price. Last week, this pair made another bearish move after the leader of the Brexit Party declared that his party would stand down from strong Conservative strongholds in the December elections, which increases the odds of the conservatives securing a clear majority.
GBP/USD moved lower and the 20 SMA turned into resistance again. Although, today we are seeing a retrace higher as the GBP retraces lower, following a bullish day yesterday and the price has climbed above the 20 SMA again. Now EUR/GBP is headed towards the 50 SMA (yellow) where we plan selling this pair. The retrace will be complete by them, since stochastic is approaching the overbought area.
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