The EUR/GBP pair broke out towards the 0.90 level during the day on Wednesday, but then pulled back rather stringently. Because of the action that I have
The EUR/GBP pair broke out towards the 0.90 level during the day on Wednesday, but then pulled back rather stringently. Because of the action that I have seen over the last 24 hours, I believe that we are going to continue to consolidate between the 0.90 level on the top, and the 0.88 level on the bottom. I expect a lot of volatility, but quite frankly that should not be a surprise as we have seen so much in the way of headlines crossing the wires about the divorce of the UK from the European Union, and of course that’s a very fluid situation. Longer-term, I still believe in the uptrend, and because of the more certain condition in the EU than we get in the UK, but I think we will continue to be very noisy, and therefore it should continue to be a very dangerous market.
If we break down below the 0.8933 level, I believe that selling is possible, but again is a short-term type of situation. Alternately, if we break above the 0.9020 level, then we probably go much higher, perhaps the 0.93 level after that. Ultimately, this is a market that continues to be very noisy, and I don’t see a change in that anytime soon. If we were to somehow break down below the 0.88 level, that would be a very negative sign, and would change the attitude of the markets in general. However, I suspect that isn’t going to happen anytime soon, and therefore I remain bullish in general, but I also remain cautious and will use smaller trading positions than usual. I still believe that we could eventually see parity, but that is several months away to say the least, as we sort this mess out.
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.