Euro / British PoundShort
May the 4th be with you
Updated
This is not an idea to trade, just my very brief And very simple observation.
Following the latest ECB interest rate decision I question if this is the point at which the UK and EU monetary policies diverge.
With the UK experiencing an increase in inflation I expect interest rates to be increased in line with this.
The price has now broken the support provided by the year long bullish trend channel (blue). Although the market is oversold at the moment, ill be looking for a close below the structure before considering a sell.
Following the latest ECB interest rate decision I question if this is the point at which the UK and EU monetary policies diverge.
With the UK experiencing an increase in inflation I expect interest rates to be increased in line with this.
The price has now broken the support provided by the year long bullish trend channel (blue). Although the market is oversold at the moment, ill be looking for a close below the structure before considering a sell.
Note
The price has now reached my POI for a buy at 0.8698.To support this, not only is the current price oversold, the general structure is moving with a descending wedge pattern which is supported by moderate divergence on the indicators and a degree of hidden divergence on the delta.
My area is just before the previous high around 0.8740. I think the price has the potential to push further down so I plan to scale in my positions if the price falls further. I am very cautious given BoE rates on Thursday in light of sticky double digit inflation. I guess we'll see come the end of the week.
Note
I entered a second trade at 0.8682 and a third trade at 0.8665. As we have had a strong impulse break from the descending wedge structure whilst taking into account the expected rate rise, policy guidance and lacklustre performance of the UK economy year to date, i can't see the GBP becoming overwhelmingly strong in the coming weeks.That being said, I've closed my trades down at 0.8732 in anticipation of a short term correction towards the previous structure; in which case I will enter a new long position and update in due course.
The profit so far for the 1st, 2nd and 3rd trades are 32 pips, 50 pips and 67 pips respectively.
A total of 149 pips so far.
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