AUTOREFRESH 
EUR/GBP trading strategy: buy dips for sharp recovery rally
By Sean Lee || January 31, 2010 at 23:31 GMT
|| 5 comments || Add comment
- Sentiment on sterling has done a significant about turn
- In times of risk aversion, EUR will out perform the GBP
- EUR/JPY is approaching major support and the SNB is buying EUR/CHF
- Buy dips towards .8660 with partial s/l below .8625 and balance below .8590. Target .8850
Have a dry weekend all 
Sorry, Sean, When you say sterling’s done an about turn – do you mean the overall negativity that was with it since Friday and through the weekend is the new sterling, or do you mean since market open over the past few hours it’s been stabilized? If it’s the fact it’s stopped falling, I’m not sure I’ve caught the reason for that about turn? (Sorry for asking, just not getting the time period you’re referencing … I’ll wake up yet)
Hi Thomasio. I mean before Friday the GBP was generally well-favoured by the market with a buy-dip strategy in cable and a sell in EUR/GBP looking like the way to go. That bullish GBP sentiment has now seemed to have evaporated almost overnight and I think we see further sell-offs in the GBP which I prefer to trade through a long EUR/GBP trade
I don’t think the SNB has been active in weakening he CHF. I believe that they will be very concerned if and when the EC rate falls to 1.4600, as a longer term weekly support level comes in at 1.4580 after that there is no protection until 1.4280 area.
OK – thanks – that’s what I was thinking. I do think we’ll see a revisit of 145 and higher in the next few days, but also a redip down to 142’s. Not sure I completely understand the negativity towards the GBP (no major fundamental changes in the last weeks vs. the months before, & aside from how bad shape the UK is in), but certainly the charts are showing bearishness.
Hi Louis, nice to hear from you. The SNB were reportedly buying EUR/CHF through interbank platforms on Friday afternoon in Europe, from about the 1.4670 level.