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EUR/GBP Descending Channel Can Switch to Uptrend Swing

November 29, 2020 (Last updated on December 7, 2020) by

Another chart pattern promises a potential disaster to the British pound on the weekly chart. This time, it is EUR/GBP, which has formed a descending channel and can now post an upward breakout, returning to the pre-channel uptrend.

The image below shows the channel as two parallel yellow lines. My potential entry point is where the cyan line is, which is at 10% of the channel’s width above the upper border). I will set my take-profit to where the green line is (at 100% of the channel’s width above the upper border). The stop-loss isn’t shown on the chart because it will be set to the low of the breakout candle. However, if the breakout candle trades mostly outside of the channel, the stop-loss will be set to the low of the previous candle instead. A downside breakout will signal an end to this trading setup since a descending channel should serve as a continuation pattern for a preceding downtrend.

EUR/GBP - Descending Channel Pattern on Weekly Chart as of 2020-11-29

I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this EUR/GBP pattern. You can trade it using my free Chart Pattern Helper EA.

Update 2020-11-30 10:15 GMT: This pattern turned to be quite problematic for my Channel Pattern Helper EA — it calculated an incorrect stop-loss. My first trade executed today at 5:31 GMT with entry at 0.89754 and SL at 0.89703 (5.1 pips!). Of course, it got soon closed by stop-loss. Unfortunately, I haven’t been online to control the process. When I had found out about the problem, I have fixed the error in the CPH expert advisor and launched it again. Luckily, EUR/GBP pull-back was still going and the robot has managed to re-enter a long position at 8:25 GMT with the same entry — 0.89754, but this time stop-loss was correctly set to the low of the previous week — 0.88660. The current take-profit is at 0.91381. For now, the breakout looks to be quite strong:

EUR/GBP - Descending Channel Pattern on Weekly Chart as of 2020-11-30 - Post-Entry Screenshot

Update 2020-12-07 17:32 GMT: The take-profit level of 0.91103 has been hit at 8:25 GMT today. It warms my heart to see the price to go straight up like this when it breaks out of a descending channel:

EUR/GBP - Descending Channel Pattern on Weekly Chart as of 2020-12-07 - Post-Exit Screenshot

If you have any questions or comments regarding this descending channel on the EUR/GBP chart, please feel free to submit them via the form below.

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