I've been watching the EUR/GBP pair very closely this week. Since dropping below 0.85 last month it's been steadily climbing upwards and in recent days it's been hovering just above the 0.88 level. However there are signs starting to emerge that this pair could be about to turn downwards.
If you look at the 4 hour chart for this pair and draw the Supertrend indicator you can see that although it's green, it has flattened out a lot, which is always a good indication that the bullish trend is running out of momentum.
Furthermore you can also see that the price has so far posted three recent highs of 0.8839, 0.8835 and 0.8833. Therefore it's clear that this pair is clearly struggling to breakout and post new highs.
This is why I personally believe that there is an excellent low-risk high-reward trading opportunity available on the EUR/GBP pair at the moment.
Indeed I opened a short position earlier this morning at 0.8820 and believe it could work out very nicely. I have placed my stop loss roughly 10 points above the highest high at 0.8850 in case the price does eventually break upwards, but I intend closing the position at somewhere between 0.87 and 0.8750 (I haven't decided yet).
The way I see it is that I'm perfectly prepared to risk a small 30 point loss in order to potentially make 70-120 points.
Let's see how it turns out.
(UPDATE: You could die of boredom watching this pair but thankfully I've finally managed to close this position at 0.8746 after it finally dipped below 0.8750. So this was a decent enough profit in the end).
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