Trade of the Week: long EUR/GBP
The recent recovery in EUR/GBP has brought it to our attention. We look to go long EUR/GBP with an initial target of £0.8850, and a stop at £0.8680.
(Video summary)
Natural gas
Welcome to IG's trade of the week. Last week, we talked about how to make money by shorting natural gas. Guess what? That trade is still going strong! The natural gas market keeps getting weaker, which means our strategy is working out pretty well. We have a bearish outlook for the short-term, meaning we expect prices to continue going down.
Long EUR/GBP
Now, let's dive into this week's video and learn something new. We're going to talk about an interesting trade idea: going long on euro/sterling. Don't worry if you're not familiar with these terms, we'll break it down for you.
Euro/sterling is a fancy way of saying the exchange rate between the euro and the British pound. And going long simply means we believe the euro is going to strengthen against the pound.
Why do we think so? Well, EUR/GBP has been recovering nicely in the past week. It keeps reaching higher highs and higher lows, which is a good sign that an uptrend is happening. The price has also moved above the 200-hour moving average, which is like a trend indicator, and it looks like it's going to keep going up.
To be safe, we need to be prepared for some potential volatility. There are some important meetings coming up that could shake the market a bit. That's why we suggest setting the stop at 86.80. This means if the trade goes against us and the price falls below that point, we'll automatically exit the trade to limit our losses.
But let's focus on the positives! Our initial target, the level we hope euro/sterling will reach, is 88.40. The last time it was at that level was back in May. So if everything goes according to plan, we could make some nice profits.
So, to sum it up, this week's video is all about going long on euro/sterling. We're aiming for a target of 88.40 and our stop is set at 86.80.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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