The EUR/GBP pair initially tried to rally during the session on Wednesday, but as you can see fell and formed a shooting star for the second day in a row. With that being the case, it appears to me that we are going to trying to reach the 0.78 handle again. That is an area that is rather supportive, so I’m not necessarily keen to start selling here. On the other hand, if we broke above the top of the shooting star, that would be a very bullish sign, at least for the short-term. I would necessarily expect it to be a great long trade waiting to happen, but it does suggest a perhaps we would get a little bit of a bounce, possibly as high as the 0.80 handle.
It is likely that we will get a lot of volatility regardless, so therefore no matter what you are doing in this pair you need to seriously think about whether or not you can handle the volatility. Quite frankly, it’s going to be easier to trade the Euro and the Pound against other currencies, but at the end of the day I would anticipate more consolidation over the longer term. With that being said, it can make for profitable trading environment if you are patient enough to wait for the setups.
Below the 0.78 handle is a different story
Below the 0.78 handle is a different story in my opinion. If we do fall below that level, I think we could very easily circa breakdown and head down to the 0.75 handle given enough time. Remember, this pair doesn’t typically move very quickly as it does tend to kind of grind away from side to side. After all, the two economies are highly interconnected so it makes sense that the movement is a necessarily the smoothest at times. Nonetheless, if you are patient enough there are privacy be had. Remember that the PIP value in this particular pair is roughly double, so it doesn’t take his big of moves as it might in some of the other pairs.
