Today brings something for the long-term position investors on EURGBP pair. We will discuss the situation on the weekly chart, so there is not much here for the scalpers and day traders. First of all, taking a quick look on the chart and you do not see this Armageddon effect which was supposed to happen after Brexit. Traders have no hesitations in terms of buying the Pound and they have been doing that constantly since the March 2020.
The main reason, why we wrote this piece is the fact that after weeks of declining, the price finally reached the mother of all supports for the EURGBP. This support is a horizontal area around 0.8320. It was a key level, at the end of 2016 and beginning of 2017. Also, at the end of 2019 and beginning of 2020. It is important now as well.
EURGBP reached that support last week and surprise surprise, we saw a bullish bounce. This is an amazing place to open a long-term long position, in theory though. We always need to be aware of the possible breakout to the downside. That should not worry us as there are always stop-loss orders, which you can use and, in this case, it is pretty clear where they should be placed – below the orange support. That gives us an amazing long trade possibility with a very tempting risk to reward ratio.
In case the support would be breached, that opens us an occasion to go short but chances for that are now limited, although we cannot exclude this possibility and if it will happen, traders should act accordingly, so open a long-term short.
Trading FX/CFDs on margin bears a high level of risk, and may not be suitable for all investors. Before deciding to trade FX/CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. You can sustain significant loss.