EUR/GBP Daily Price Forecast – 16th January 2025

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Trade Summary:

EURUSD
Sell Stop @ 1.02863
TP @ 1.02530
SL @ 1.03284

Detailed Analysis of the EUR/GBP H4 Chart:

1. Overview of the Trade Setup:

• Instrument: EUR/GBP (H4 timeframe)

• Buy Stop Level: 0.84226

• Stop Loss (SL): 0.83798

• Take Profit (TP): 0.84468

This trade setup is based on a bullish momentum confirmation, with the price positioned near a key resistance level and showing signs of a potential upward continuation.

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2. Key Technical Indicators:

• Momentum Power:

  • The momentum power is slightly positive (0.00012975), indicating bullish sentiment. This suggests that buyers are gradually gaining control, and the price is likely to break higher.

• Price Action:

  • The price is close to the 0.84200 round level, which is a significant psychological level. A break above this level confirms bullish momentum.

  • The candlestick patterns show rejection of lower prices, with buyers stepping in near the support zone.

• Moving Averages:

  • The price is trading above the 200-period moving average (green line), which indicates a bullish trend.

  • The moving average is sloping upward, further confirming the bullish bias.

• Support and Resistance Levels:

  • Resistance: The resistance level at 0.84468 (TP) is a logical target, as it aligns with previous price action and a potential supply zone.

  • Support: The support level at 0.83798 (SL) is well-placed below recent lows, allowing room for minor retracements.

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3. Risk-to-Reward Ratio:

• Risk: The distance between the Buy Stop and the Stop Loss is 42.8 pips (0.84226 - 0.83798).

• Reward: The distance between the Buy Stop and the Take Profit is 24.2 pips (0.84468 - 0.84226).

• Risk-to-Reward Ratio: Approximately 1:0.57. While the risk-to-reward ratio is not ideal, the trade is valid due to strong bullish confirmation.

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4. Trade Justification:

• Bullish Momentum:

  • The positive momentum power and price action near the 0.84200 round level suggest a strong likelihood of a bullish breakout.

  • The chart indicates a long trade confirmation, aligning with the buy stop order.

• Trend Alignment:

  • The price is above the 200-period moving average, confirming a bullish trend.

  • The moving averages and price structure indicate that buyers are in control.

• Logical Stop Loss and Take Profit:

  • The Stop Loss is placed below the recent support level, allowing for minor retracements without invalidating the trade.

  • The Take Profit is placed at a logical resistance level, ensuring a realistic target.

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5. Potential Risks:

• False Breakout: If the price fails to sustain above 0.84226, the trade could be invalidated.

• Market Volatility: Sudden news or events could cause unexpected price movements.

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6. Summary of the Trade Setup:

• Buy Stop: 0.84226 (above key resistance level to confirm bullish momentum).

• Stop Loss (SL): 0.83798 (below recent support to allow for retracements).

• Take Profit (TP): 0.84468 (at a logical resistance level).

This trade setup aligns with the bullish trend and momentum, offering a high-probability opportunity to profit from a continuation of the upward move. However, the risk-to-reward ratio should be carefully considered before execution.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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