Today brings something for the long-term position investors on EUR/GBP 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 at the chart, you do not see this Armageddon effect that was supposed to happen after Brexit. Traders have no hesitations about buying the Pound, and they have been doing that constantly since March 2020.
After weeks of declining, the price finally reached the mother of all the EUR/GBP support. This support is a horizontal area around 0.8320. It was a key level at the end of 2016 and the beginning of 2017. Also, at the end of 2019 and the beginning of 2020. It is important now as well.
EUR/GBP reached that support last week, and we saw a bullish bounce. This is a fantastic 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 a fantastic long trade possibility with a very tempting risk to reward ratio.
If the support is breached, that allows us to go short, but chances for that are now limited, although we cannot exclude this possibility, and if it happens, traders should act accordingly, so open a long-term short.
