Brief trading recommendations for EUR/USD and GBP/USD on 09/01/20

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The EUR/USD currency pair managed to change the movement structure from a side channel from lines no. 4, 5 and 6 to a rising channel from trend lines no. 1, 2 and 3 for the first time in a long time. The signal for the direction change was the breakdown of the local high (1.1965) on August 18.

Based on the obtained data on finding the quote relative to price channels, we can consider several scenarios for market development:

First, the price movement in a new rising channel.

The upward course of the price should not be overlooked in the market, but in order for the movement to be stable, the quote must consolidate above the 1.2000 level, which is considered an important price level in the market. If this value breaks down, buyers will gain confidence and will keep the upward trend in the direction of 1.2080-1.2150.

Second, the Eurocurrency is overbought.

In this scenario, we consider the factor of long-term strengthening in the value of the European currency, which can put pressure on buyers, where sell positions may arise together with the price level of 1.2000. In particular, the price can consolidate above 1.2000 and rebound from the level towards the coordinates 1.1940–1.1900.

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On the other hand, the GBP/USD currency pair managed to overcome the local highs on August 19 and 21, which led to an immediate increase.

A consistent upward price movement indicates a change in market mood, from a sideways channel from lines No. 4, 5 and 6 to an upward trend from trend lines No. 1, 2 and 3, which may affect the mid-term outlook of the market.

Based on the obtained data on finding the quote relative to price channels, we can consider several scenarios for market development:

First, a price movement in the structure of the new channel.

The upward movement is already something common, since the quote literally updates the highs of 2020 on a daily basis. If the current mood is maintained, we can continue the upward movement towards line no. 2 (1.2450 area).

Second, a technical correction.

In this scenario, we consider a corrective move due to a long price movement in the same direction. The resistance level can theoretically be the average level of the new channel, line no. 2 (1.2450 area).

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