1. Overview of Market Structure
The EUR/GBP pair is forming a Rising Wedge Pattern, a well-known bearish reversal formation, which suggests that the current uptrend may soon reverse into a downtrend. The price has been moving within a tightening range, making higher highs and higher lows, but the upward momentum appears to be weakening.
A breakdown from this wedge is a strong bearish signal, indicating that sellers are gaining control, and a significant price drop is expected.
2. Chart Pattern: Rising Wedge – Bearish Reversal
A Rising Wedge is a pattern that occurs when price moves upward within a contracting range. This pattern typically forms after an uptrend and suggests that bullish momentum is slowing down.
Characteristics of the Rising Wedge in This Chart:
The price has tested the upper resistance zone multiple times, but each attempt has resulted in a rejection.
The lower support trendline has been tested frequently, showing that buyers are losing strength.
The breakdown of the wedge signals a strong bearish move, with price expected to drop toward key support levels.
This pattern becomes valid once the price breaks below the lower trendline, confirming the bearish outlook.
3. Key Technical Levels & Zones
A. Resistance Zone (0.84853) – Strong Supply Area
Marked as a Resistance Zone, where price has struggled to break through.
Sellers have stepped in around this level multiple times, preventing any further bullish movement.
Acts as a major stop-loss level for bearish trades, as a breakout above this zone could invalidate the setup.
B. Support Zones (Potential Take-Profit Targets)
1st Support Level (TP1) – 0.82539
This level has previously acted as strong support, where buyers have entered the market before.
A short-term pullback or consolidation may occur here.
2nd Support Level (TP2) – 0.81332
This is the final bearish target, marking a key demand zone from where price has bounced in the past.
If bearish momentum continues, price could reach this level, making it an ideal take-profit zone for swing traders.
4. Trading Strategy & Execution
A. Entry Strategy
A short trade is ideal after the price breaks below the rising wedge pattern. There are two possible entries:
Aggressive Entry:
Enter immediately after the breakout of the lower trendline, anticipating strong downside momentum.
Higher risk as price might retest the trendline before moving down.
Conservative Entry:
Wait for a retest of the broken trendline before entering short.
This confirms the breakdown, reducing false breakout risks.
B. Stop-Loss Placement
Stop-loss should be placed just above the resistance zone (0.84853).
This prevents being stopped out by minor pullbacks before the actual move happens.
C. Take-Profit Targets
TP1: 0.82539 (First major support level – potential profit booking area)
TP2: 0.81332 (Final bearish target – strong demand zone)
5. Risk Management & Trade Management
Risk-to-Reward Ratio (RRR)
This trade offers a high RRR, making it an attractive setup.
The stop-loss is small compared to the potential downside move.
Trailing Stop Strategy
A trailing stop can be used to lock in profits as price moves lower.
If price reaches TP1, move stop-loss to breakeven to secure capital.
If price reaches TP2, close the trade for maximum profit.
Exit Strategy
Exit early if price fails to break key support zones.
Monitor price action around TP1 & TP2 for signs of reversal.
6. Sentiment Analysis & Market Context
Bearish Confirmation:
Breakdown from the wedge signals bearish sentiment in the market.
If price fails to sustain above support zones, further downside is likely.
News & Fundamentals:
Major economic events or interest rate decisions could impact EUR/GBP volatility.
Traders should check for UK & Eurozone news before entering the trade.
7. Conclusion – Bearish Outlook
The Rising Wedge breakdown is a strong short-selling opportunity.
Confirmation is key: Enter short after the breakdown, use proper risk management, and aim for TP1 & TP2.
If price invalidates the pattern by breaking above 0.84853, the trade setup should be reconsidered.
This setup provides a high-probability bearish trade with a well-defined stop-loss and risk-to-reward ratio.
The EUR/GBP pair is forming a Rising Wedge Pattern, a well-known bearish reversal formation, which suggests that the current uptrend may soon reverse into a downtrend. The price has been moving within a tightening range, making higher highs and higher lows, but the upward momentum appears to be weakening.
A breakdown from this wedge is a strong bearish signal, indicating that sellers are gaining control, and a significant price drop is expected.
2. Chart Pattern: Rising Wedge – Bearish Reversal
A Rising Wedge is a pattern that occurs when price moves upward within a contracting range. This pattern typically forms after an uptrend and suggests that bullish momentum is slowing down.
Characteristics of the Rising Wedge in This Chart:
The price has tested the upper resistance zone multiple times, but each attempt has resulted in a rejection.
The lower support trendline has been tested frequently, showing that buyers are losing strength.
The breakdown of the wedge signals a strong bearish move, with price expected to drop toward key support levels.
This pattern becomes valid once the price breaks below the lower trendline, confirming the bearish outlook.
3. Key Technical Levels & Zones
A. Resistance Zone (0.84853) – Strong Supply Area
Marked as a Resistance Zone, where price has struggled to break through.
Sellers have stepped in around this level multiple times, preventing any further bullish movement.
Acts as a major stop-loss level for bearish trades, as a breakout above this zone could invalidate the setup.
B. Support Zones (Potential Take-Profit Targets)
1st Support Level (TP1) – 0.82539
This level has previously acted as strong support, where buyers have entered the market before.
A short-term pullback or consolidation may occur here.
2nd Support Level (TP2) – 0.81332
This is the final bearish target, marking a key demand zone from where price has bounced in the past.
If bearish momentum continues, price could reach this level, making it an ideal take-profit zone for swing traders.
4. Trading Strategy & Execution
A. Entry Strategy
A short trade is ideal after the price breaks below the rising wedge pattern. There are two possible entries:
Aggressive Entry:
Enter immediately after the breakout of the lower trendline, anticipating strong downside momentum.
Higher risk as price might retest the trendline before moving down.
Conservative Entry:
Wait for a retest of the broken trendline before entering short.
This confirms the breakdown, reducing false breakout risks.
B. Stop-Loss Placement
Stop-loss should be placed just above the resistance zone (0.84853).
This prevents being stopped out by minor pullbacks before the actual move happens.
C. Take-Profit Targets
TP1: 0.82539 (First major support level – potential profit booking area)
TP2: 0.81332 (Final bearish target – strong demand zone)
5. Risk Management & Trade Management
Risk-to-Reward Ratio (RRR)
This trade offers a high RRR, making it an attractive setup.
The stop-loss is small compared to the potential downside move.
Trailing Stop Strategy
A trailing stop can be used to lock in profits as price moves lower.
If price reaches TP1, move stop-loss to breakeven to secure capital.
If price reaches TP2, close the trade for maximum profit.
Exit Strategy
Exit early if price fails to break key support zones.
Monitor price action around TP1 & TP2 for signs of reversal.
6. Sentiment Analysis & Market Context
Bearish Confirmation:
Breakdown from the wedge signals bearish sentiment in the market.
If price fails to sustain above support zones, further downside is likely.
News & Fundamentals:
Major economic events or interest rate decisions could impact EUR/GBP volatility.
Traders should check for UK & Eurozone news before entering the trade.
7. Conclusion – Bearish Outlook
The Rising Wedge breakdown is a strong short-selling opportunity.
Confirmation is key: Enter short after the breakdown, use proper risk management, and aim for TP1 & TP2.
If price invalidates the pattern by breaking above 0.84853, the trade setup should be reconsidered.
This setup provides a high-probability bearish trade with a well-defined stop-loss and risk-to-reward ratio.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.