EUR/USD and GBP/USD Forecast - 11 May 2016

EUR/USD

The EUR/USD pair initially tried to rally on Tuesday but found enough resistance above the 1.14 level to turn things around and form a bit of a shooting star. We do have quite a bit of noise below though, so I’m not necessarily looking for this market to fall apart. Even if we break lower, I think there is quite a bit of noise only down to the 1.12 handle which had recently offered quite a bit of support. It is because of this I’m actually more comfortable buying this pair even though we did up forming another negative candle. What I mean by this is that if we break above the top the shooting star for the session on Tuesday, that’s a very strong sign and could send buyers back into the marketplace and trying to reach the 1.15 handle again. No matter what happens, expect volatility.

EURUSD

GBP/USD

The British pound bounced a bit during the day on Tuesday, trying to reach towards the 1.45 region. That’s an area that is psychologically significant because of the large round number aspect, was also previously resistive anyways. Because of that, it doesn’t surprise me to see the market pullback from there but I am not ready to start selling quite yet. I think we would need to break down below the shooting star from the Monday session in order to consider it, and even then it’s going to be a brutal grind back to the 1.41 level.

If we managed to break above the 1.45 level on a daily close, I could be convinced to start buying again, but I think that the market will probably struggle to reach the 1.48 level as it was so resistive previously. I think eventually we could break out and above that level, just that it would be a very significant fight in the meantime. No matter what happens, expect quite a bit of choppiness.

GBPUSD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.