Euro/Pound (EUR/GBP) About To Rebound?
Most of the time the pairs that I look at are US dollar-related as they give both an indication of general risk themes in the market and the specific strength or weakness in a currency. However today I am looking at EUR/GBP as the chart looks too juicy to pass up.
As we can see from this chart, the overall trend for the Euro vs. the Pound is lower as the debt crisis in Europe has sent money flows seeking the relative safety of the Pound. The economic data has been coming in better than expected in the UK and the Euro debt crisis has sucked the life out of the Euro.
But for how much longer will this continue? There has been some speculation that the BOE is going to increase their asset purchase program which would weaken the Pound, while at the same time the Euro could strengthen as the impact of the ECB lending program could be less than expected.
So I’m looking at a low risk trade here to buy EUR/GBP ahead of .83 as a possible double-bottom formation has occurred, putting a stop just below .83 with the hope that this pair will retrace to .84.
Sometimes as traders we need to buck conventional wisdom to find the best trades!