The EUR/GBP currency pair has fallen a bit during the trading session on we have bounced just a bit to show signs of life, so it suggests that we are going to continue to see a lot of noisy behavior. If we break down below the bottom of the candlestick, then it’s likely that we could drop down to the 50-Day EMA, sitting right around the 0.87 level.
EUR/GBP Technical Outlook
- If we turn around and break out above the 0.89 level, then it’s possible that this pair is looking to the 0.90 level.
- However, we are essentially right around the top of the recent consolidation area, so it’ll be interesting to see whether or not we are going to fail in this area.
- If we break down below the bottom of the candlestick, then the market not only could try to take out the 50-Day EMA, but possibly even the 200-Day EMA, which is closer to the 0.86 level.
- On the other hand, breaking out to the upside then shows that the Euro continues to gain overall favor.
What is worth noting is that both currencies have fallen a bit against the United States dollar, which is the best way to measure the strength of a currency globally. Having said that, you need to look at this through the prism of triangulation, meaning that paying close attention to how the EUR/USD pair and the GBP/USD pair behave can give you an idea as to how this pair may move. If you notice that the British pound is struggling more than the Euro, it does stand to reason that the Euro is going to continue to do better against the British pound. Obviously, the exact opposite would be the case as well, so pay close attention to which one is performing better.
It’s worth noting that the candlestick on Tuesday was rather negative, swallowing the candlesticks of the previous week or so, and therefore I think it’s probably a situation where you see more follow-through than anything else. This will be especially true if we continue to see exhaustion due to the fact that we have not seen a lot of volume in the market recently, so a little bit of follow-through is probably asking a lot until everybody comes back to work, perhaps early next week as this week will be about getting back to work more than anything else.
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