Top Trade Idea For May 8th, 2014 – EURGBP
By Mircea Vasiu on May 8, 2014 10:11:11 GMT
I would like to focus this week on the eurgbp cross and the chart above is the hourly chart, so quite a small time frame to analyze but the pattern here is quite interesting and the reward should be the same.
Plus, we all know a pip in the eurgbp cross is worth much more than a normal pip and this should be just an incentive for analyzing the hourly chart as well.
The pattern that you see above has the potential to be a flat, not any type of flat but a flat with a strong b wave, an irregular flat, and the falling wedge to the downside is mandatory to take the lows in the previous wave a red. Well, it took as wave a red was a triangle and the end of the triangle is the end of the wave.
The move to the downside, the c wave red is actually an impulsive move as even though the waves are corrective, they are forming a so called terminal impulsive move and in this pattern all the rules of an impulsive move should be respected as well. And they are.
What I am trying to say is that the current break higher above the 2-4 trend line of the falling wedge is a bullish sign and I would stay long until the highs in the 0.8384 are broken for the first target and then looking for 0.8450 area to come.
The thing is that on the bigger time frames, this flat is the last corrective wave part of a triple combination and that one shows us a possible leg of a contracting triangle. Hence, bigger retracement levels to come, so the second target is right along those lines.
About Mircea Vasiu
Mircea Vasiu has an MBA in International Business from an American University, graduating Magna Cum Laudae. He has been a professional trader for the last 8 years and is involved in various educational projects for different financial companies. He also runs a trading signal for the currency markets at www.capitalpropertiesfx.com.
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