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The EUR/GBP pair rallied during the Friday session, but was turned away at the 0.81 handle yet again in order to form a shooting star. However, it appears that the most recent low is much higher than the previous one, and as such we think that any pullback at this point could be hampered by not only that area, but the 0.80 area as well.
Looking at the big picture, we see consolidation between 0.81 and 0.79 or so. This is a relatively tight market, but this pair is notorious for grinding, not running. Because of the relative strength of both currencies recently, it is difficult to trade this pair with any real clarity. This is why we believe that this pair will continue to consolidate in this general vicinity, and as such will be very difficult to trade for anything more than an ultra short-term trade.
However, that's not to say that there will be trades to be had. We believe that the 0.81 handle should provide resistance going forward, and the fact that the shooting star appeared on Friday suggests that we could perhaps see a relatively short move down to the 0.80 handle. Because of this, we wouldn't mind shorting this pair below the bottom of the Friday shooting star. Granted, we are not looking to move mountains with this particular type of trade, but it does seem to be a serious possibility for short-term gains.
With the British pound look so strong, it is hard to go long this pair for any length of time. After all, the British pound is one of the strongest currencies at the moment, and as such we think this pair will fight rising with the general celebration of all things Euro at the moment. In the end, we think that the British pound will win out, but we need to see that decisive move. As we stated previously, this is going to be a short-term traders market for the foreseeable future, but one day we will finally see this range broken out of and we suspect that it will go in favor of Britain.