EUR/GBP – Anatomy of a currency cross

EUR/GBP monthly chart
EUR/GBP monthly chart

A recurring theme of our weekly forex webinars  is the importance of considering the cross currency pairs whenever trading forex. Many traders simply fail to take account of the flows into these pairs which often given a more nuanced view of the market’s sentiment towards a currency.

One excellent example is the eur/gbp where on the monthly chart the pair has been in a sustained down trend since September 2013, where it has been moving steadily through various levels of support, as well as high and low volume nodes on the VPOC indicator (volume point of control). Most recently, the pair has broken through a high volume node in the 0.7182 region, and indeed last month’s price action was also confirmed with a deep upper wick to the candle, suggesting further downside momentum to come. What is also interesting here is the increase in volumes which have accompanied the current moves, thereby validating the bearish picture for the pair.

Longer term we are now looking at a potential move lower to test the 2007 support at 0.6538, a view shared by Goldman Sachs.

From a fundamental perspective it is easy to see why this pair has been so heavily bearish, reflecting as it does the market’s negative view of the euro, equally balanced with a positive view of the British pound, which of course sits outside of the eurozone. In some respects sterling is being increasingly seen a ‘safe haven’ currency, and indeed in previous times was the currency of first reverse.

Finally, by considering a cross currency such as the eur/gbp this then provides triangulation against the dollar based majors, thereby providing a more balanced perspective of the forces driving each currency in isolation.

By Anna Coulling

Charts are from the MT4 platform and the trading indicators from Quantum Trading.


About Anna 1055 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

2 Comments on EUR/GBP – Anatomy of a currency cross

  1. Hi Anna

    I have been following you and David almost the whole year,I even can’t believe if you guys are living in this world because of your powerful systems you have developed for us traders,I always wonder how do you even started to think of creating these tools.Anyway I will to come to UK and meet you in person next year if that can happen and be arranged,I want to see you and touch you with my hand I am looking forward to have the full package of your tools.

    Long live real traders and real Genius.Thank you

    From Vumani Gamede in South Africa

    • Hi Vumani – you are very kind and thanks for dropping by, and I am always very touched by comments such as yours which mean a great deal to both David and myself – so thank you again and do keep in touch here. Wishing you every success in your trading from us both – Anna and David

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