EUR/GBP Daily Price Forecast – 19th February 2025

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Trade Summary:

EURGBP
Buy Stop @ 0.82878
TP @ 0.83166
SL @ 0.82638

Detailed Analysis of the EUR/GBP H4 Chart

The chart provided is for the EUR/GBP currency pair on the H4 (4-hour) timeframe. Below is a detailed analysis of the trade setup based on the chart and the information provided:

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Trade Setup Overview

• Buy-Stop Entry:

  • Level: 0.82878

  • A buy-stop order is placed above the current price, indicating an expectation of upward momentum if the price breaks this level.

• Stop Loss (SL):

  • Level: 0.82638

  • The stop loss is set below the entry point to limit losses in case the trade moves against the expected direction.

• Take Profit (TP):

  • Level: 0.83166

  • The take profit is set above the entry point, targeting a specific level for profit-taking.

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Key Observations

• Momentum Power:

  • The chart mentions "Momentum Power: -0.00021750," which suggests weak or negative momentum at the time of analysis. However, the trade setup anticipates a reversal or breakout to the upside.

• Round Levels:

  • The price is near significant round levels (e.g., 0.82800 and 0.82700). These levels often act as psychological support or resistance zones.

• Candlestick Confirmation:

  • The trade setup relies on candlestick confirmation for entry. This indicates that the strategy is based on price action and momentum.

• Moving Average:

  • A green moving average line is visible on the chart. The price is currently below the moving average, which may indicate a bearish trend. However, the buy-stop order suggests a potential breakout above this level.

• Support and Resistance:

  • The chart shows clear support and resistance levels:

    • Support: Around 0.82638 (stop loss level).

    • Resistance: Around 0.83166 (take profit level).

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Trade Analysis

• Risk-Reward Ratio:

  • Risk: Entry (0.82878) - Stop Loss (0.82638) = 0.00240 (24 pips).

  • Reward: Take Profit (0.83166) - Entry (0.82878) = 0.00288 (28.8 pips).

  • Risk-Reward Ratio: 1:1.2, which is acceptable but slightly conservative.

• Trend Analysis:

  • The price is in a downtrend, as indicated by the lower highs and lower lows. The moving average also suggests bearish momentum.

  • The buy-stop order anticipates a reversal or breakout, which may occur if the price breaks above the moving average and the 0.82878 level.

• Market Context:

  • The trade setup is counter-trend, as the overall trend appears bearish. Counter-trend trades carry higher risk and require strong confirmation signals.

• Potential Risks:

  • If the price fails to break above 0.82878, the trade will not trigger.

  • If the trade triggers but fails to sustain upward momentum, it may hit the stop loss.

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Recommendations

• Confirmation:

  • Wait for strong bullish candlestick patterns (e.g., engulfing or pin bar) near the entry level to confirm the breakout.

• Trend Reversal Signals:

  • Look for additional signs of trend reversal, such as divergence on momentum indicators (e.g., RSI or MACD).

• Adjustments:

  • If the price continues to trend downward, consider revising the trade setup or waiting for a better entry point.

• News and Events:

  • Check for any upcoming economic news or events that may impact the EUR/GBP pair, as these can cause sudden price movements.

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Conclusion

This trade setup is a speculative buy-stop order anticipating a breakout above 0.82878. While the risk-reward ratio is reasonable, the trade is counter-trend, which increases the risk. Ensure proper confirmation and monitor the trade closely for any signs of invalidation.

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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