EURGBP dropped down to .9003 which was close enough to my posting yesterday about possibly buying. Nice little beanstalk action this morning “because” of the news from the UK of its GDP contraction. Isn’t it amazing how these unknown events seem to validate what the chart is already saying?
Pennants don’t behave exactly the same way as flags do but one can usually pickup pips if they don’t fail. This one has a lot going for it in that you’re trading with the trend (upwards). Be wary if it comes back to the breakout line. There are two reasons to watch this trade. First, is because the pair achieved my P&F price target I wrote about yesterday. I’d be surprised to see another large move upward. But surprise is not an unknown reaction when you trade. It only means I’ll watch the charts carefully. Second, and more disturbing, is that the Euro may be overvalued. Now that’s no news in any kind of trading—assets get overvalued. But there are negative indications on the Euro chart, at least there were earlier this week. I’ll have a better feel for this over the weekend which is when I do my in-depth analysis. Meanwhile, I’ll enjoy a nice move that was well-told on the charts.