The EUR/GBP pair went sideways initially during the day on Wednesday, but found enough support at the 0.89 level to turn around and rally a bit. I think
The EUR/GBP pair went sideways initially during the day on Wednesday, but found enough support at the 0.89 level to turn around and rally a bit. I think that longer-term, this market will probably continue to do reasonably well, but I also recognize that the noise in this market should continue to be difficult to handle. I think that longer-term we will see this market reach towards the 0.90 level, which is of course a large, round, psychologically significant number. Because of this, I think that we will probably see a bit of volatility there as well, and I think that once we clear that area, we will probably go looking towards the 0.92 level, and then perhaps the 0.95 level after that. This is a market that will favor the Euro, if for no other reason, just as the lack of clarity when it comes to the future of the United Kingdom, so I think it makes sense that we rally. I think that the 0.8850 level underneath continues to show massive support as we have recently formed a “W pattern” on the hourly chart.
If we did breakdown below the 0.885 level, I think the 0.88 level underneath is even more supportive, and a breakdown below there would be very negative. Ultimately though, this is a market that would need some type of major catalyst to turn things around like that, so I suspect that buying on dips will probably be the best way to deal with this market, as we have also been in a longer-term uptrend for some time. Ultimately, I am bullish on this pair, but I also recognize that there will be a lot of headlines coming out of both London and Brussels that will move this market occasionally. Because of that, small position sizing is probably necessary.
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.