EUR/GBP Forecast for the Week of October 30, 2017, Technical Analysis

The EUR/GBP pair initially tried to rally during the day on Friday, but found the 0.89 level to be a bit too resistive, and then rolled over. In fact, on the hourly chart we formed a perfect shooting star at that level, forming a perfect cell signal. We then reach down towards the 0.8825 handle, and I think that the 0.88 level underneath there is the prize. On the weekly chart, this pair does look a bit exhausted, and it’s likely that we will break down. However, do not underestimate the support at the 0.88 handle, so I prefer to sell rallies going forward on signs of exhaustion, or a breakdown below the 0.88 handle on the daily chart. I think the noise will continue, because quite frankly it makes sense with the negotiations between the European Union and the United Kingdom going on.

The Bank of England looks likely to raise interest rates, and the ECB has recently stated that perhaps quantitative easing will run longer, albeit at a slower rate. That was a bit dovish, and of course a bit surprising. If we do break down below the 0.88 handle, that could send this market down to the 0.83 level underneath, which is a little bit more of a longer-term move. Ultimately, this is a market that should continue to see noise, and I think that the sellers are starting to make headway into the market. If we broke above the 0.89 handle on the daily close, then I think we turn things back around and go looking towards the 0.90 level again. In the meantime, keep your position size small, and perhaps wait for that break down to get aggressive with any short position. If we rally above the 0.89 level, then I think a small long position can be added to once we break above the 0.90 level.

EUR/GBP Video 30.10.17