The EUR/GBP pair broke down significantly during the week, but towards the end of the Friday session, we started to see strength again, and therefore formed a hammer.
The EUR/GBP pair broke down significantly during the week, breaking down rather rapidly. However, we have seen quite a bit of stubborn support underneath, and therefore have formed a bit of a hammer. The hammer of course is a very bullish sign, and if we can break above the top of the candlestick for the week, I think we will then start grinding towards the 0.90 level again. Remember, this pair is going to be very volatile, because there are a lot of headlines coming out of both the European Union and the United Kingdom. The negotiations continue to dominate the markets, but longer-term it looks as if there is a substantial support level in this general vicinity, so breaking down is going to be difficult.
If we do break to the upside, it’s going to be more of a “buy-and-hold” situation, or perhaps even a situation where you find yourself looking at an investment of sorts. You will have to deal with a lot of volatility, but I think given enough time the uptrend will continue. If it doesn’t, there is a lot of noise between here and the 0.82 level, so I don’t think that we are going to see any type of meltdown. The market will be choppy, so I think that a lot of people will be looking at short-term trades, not necessarily long-term ones. If you are a long-term trader, patience and of course perhaps scaling in will be the best way to trade this market in either direction that proves itself to be worthy.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.