EURGBP: Finding High-Confidence Set Ups in the High-Speed Chase for Opportunity
by Nico Isaac
Updated: May 27, 2020
High-octane, high-speed chases for opportunity at an average daily trading volume of $5 T-T-Trillion: This is forex, the T-Rex of financial markets.
(By comparison, global equity markets see a daily volume of $86 billion.)
So -- The $5 trillion question is, how do forex traders stay ahead of major turns in the markets they track?
For directional clues, mainstream analysis habitually follows the low-protein trail of fundamental breadcrumbs. For example, the recent news items which suggest that economic data is driving the Euro/British Pound cross rate
And the resolution of a Major Financing Package for pandemic-stricken European nations
The recent history of the Euro/Pound, however, says otherwise.
The "economic data" trail has NOT led traders toward opportunity. This chart of the pair takes us back to late February, when the Europound was lingering in a year-long sideways trend and stood at its lowest level since the outcome of the Brexit vote in 2016.
Then, these stories in February said the "data" pointed to further weakness in the Euro vs. the Pound:
"Increased pessimism in the bond market" signaled significant downside potential
Fears of the coronavirus becoming a "global pandemic" provided negative cues
And finally: "Lasting concerns about the eurozone's economic outlook and the possibility of a lasting shutdown" gave markets "LITTLE REASON TO BUY THE EURO."
Thus, the Euro/Pound's next move should have been DOWN
But instead, the pair bottomed at .8282 on February 19, followed by a powerful rally to a 7-month high on March 18.
While mainstream analysis missed this major opportunity to the upside, Elliott wave analysis gave traders a chance to participate in the action via these well-timed forecasts:
February 22 Currency Pro Service discussed a move UP in the EURO GBP and said "trading above .8504 will give us reason to work with bullish scenarios against the .8282 low."
February 27 Currency Pro Service noted the move above .8504 has us "looking higher in what may turn out to be a very significant low against .8282 going forward."
March 3 Currency Pro Service traced the advance as wave (C) here, and said the move was "expected to... take out the .9307 peak."
On March 18, the EURO GBP touched a seven-month high at .9500. The fundamental cues this time pointed higher.
"Prospects of further easing by the "Old Lady" in combination with USD-strength are heavily weighing on the sterling and keep the bearish outlook [bullish outlook for the euro] unaltered for the time being."
The Elliott wave pattern said the opposite. On March 18, our Currency Pro Service showed this down sequence and prepared for a "pullback that could send Europound back to test the 0.8600 area."
On April 30, the pair hit bottom right in the .8600 area forecast by Currency Pro Service. That day, our analysis went on the "lookout for a low to form" -- which is exactly what happened.
Don't wait for the next big opportunity to pass you by. Get real-time analysis of high-confidence trade set-ups in the world's leading forex markets today with our premier Currency Pro Service. See below for more.
Currencies Move in Elliott Wave Patterns: Be Ready Now for the Next One
Currency Pro Service subscribers were ready for the big moves in both directions, in the EURGBP. Not all forecasts work out the way this one did … yet, as you've just seen, Elliott Wave analysis really can anticipate price trends in currencies.
See the charts and analysis we deliver to our Currency Pro Service subscribers. Follow the fast steps below.
Start Your Subscription Now
Personlize your FX Pro Service package to get the coverage you need.