EUR/GBP Breakout On Daily Chart

Hey I just wanted to share this chart with you and get some comments on it.

Would you guys just go long or would you wait for a retrace?

How far would you let it retrace? 30 pips?

What indicator or method would you use to enter the trade?

http://forexfactory.com/attachment.p...1&d=1206789919
Daily Chart Up
http://forexfactory.com/attachment.p...1&d=1206790063
4 Hr. Chart

I also wanted to add a few comments about possible fundamental driver's that could really drive this trade. I posted a thread where I discuss COT Chart Analysis. This pair fits the COT profile where the Euro shows a strong long bias with the green line just starting to turn up. The GBP shows the green line turning down, getting ready to cross and go fully negative. This is an ideal situation...(timingcharts.com).

COT Charts and Key Central Bank Interest Rates are what I consider to be the two strongest indicators of future currency movement. I rate the central bank overnight interest rate as the number one currency driver. With that said, odds have increased that Britian will lower interest rates on April 10th.

I usually do not rely heavily on other economic data when deciding whether or not to trade a currency, but I think it is currently useful for understanding the BOE and ECB line of thinking. Everything that has been happening in the United States has sent shockwaves around the world that can be felt in foriegn financial markets. For whatever reason England seems to be handling the tightening of the credit markets worse than their European counterparts. The deteriorating credit situation in Britian is probably the number one reason the BOE will lower interest rates. Furthermore British GDP, housing prices and consumer credit all came in lower than expected. The Euro Zone on the other hand looks to be dealing with a suprise of higher than expected inflation which should keep interest rates up.

Even if the Brits don't raise interest rates, all we're really worried about is market sentiment which should drive the pound lower by April 10th.

From a chart standpoint, the Pound looks weak when you compare the GBP/USD chart to the EUR/USD and USD/JPY charts. The GBP/JPY also looks like it could drop thru a hole in the floor. I would say what suprised me most about last week was the persistent Euro strength.

There is a good article on bloomberg.com, go to markets then currency. Reading the article on the Yuan will make us all want to trade Renminbi futures...closest thing to a sure thing I've ever seen.

Here is how the breakout went. And is actually still going.

http://forexfactory.com/attachment.p...1&d=1206951745

Hi Kesse,

What is your target on eur/gbp before we see a reversal. Thanks

.8000 is my target.