Brief trading recommendations for EUR/USD and GBP/USD on 08/10/20

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The EUR/USD currency pair resumed movement within trend lines 1, 2 and 3 after resistance was found within the price area 1.1900/1.1920. Based on the resistance point, Friday was built on a downward wave, during which market participants managed not only to rebound from the 1.1900/1.1920 area, but to form a full-fledged move towards trend line No. 3 (1.1755), where a pivot was found.

Following the path of the trend lines allows the trader to prepare in advance for a rebound and reversal in the market, as happened with line # 3, where the pivot point was found.

Considering the current situation in the market with respect to trend lines, we can see that after the price from line # 3 (area 1.1755) can bring the quote within the value 1.1830, where trend line # 2 is located, the main work begins here. The ascending channel (1 + 2 + 3) has existed on the market for a long time, and its further structure cannot be ruled out. A price consolidation above trend line 2 (area 1.1830/1.1840) may lead to a move towards line number 1, where there is also resistance, expressed in the price area 1.1900/1.1920.

An alternative scenario is considering a channel reversal from ascending to descending. In this outcome, trend line 3 (area 1.1740/1.750) plays the main role, since traders will receive a sell signal in case of its breakout.

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The GBP/USD currency pair changed the structure of the ascending channel of trend lines 1, 2 and 3 for the first time in a long time, where the quote managed to overcome line No. 3 (area 1.3100) last Friday. This market move led to the formation of a new channel and new trend lines.

The side channel in the structure of trend lines 4, 5 and 6 has a number of confirmations on the history of the trading chart, which allows traders to see the price interaction points in advance.

Based on the path of the current move, from trend line 6 (area 1.3000) to the side of line 5 (area 1.3080/1.3090), a number of scenarios can be assumed that can be referred to in trading.

The first scenario proceeds from the price movement along the path 6 ---> 4 (trend lines), where line 5 will not become an obstacle and the quote will be able to consolidate above the value of 1.3100, which will enable traders to enter buy positions.

The second scenario is based on Friday's downward trend, on the basis of which the market changed direction. In this case, a price rebound from trend line #5 can return the quote within the pivot point 1.3000.

In such scenario, the best entry point is below 1.3035, towards 1.3000.

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The material has been provided by InstaForex Company - www.instaforex.com