- The EUR/GBP initially fell a bit during the trading session on Monday, as we continue to see a lot of noisy behavior.
- Because of this, I think you need to be very cautious trading this market, but it is a crucial currency pair because it can give you a bit of a “heads up” as to how these currencies are going to behave against the US dollar.
- After all, you can triangulate this chart with the EUR/USD and the GBP/USD currency pairs, to find the best trade. As things stand right now, the Euro does seem to be stronger than the British pound.
However, it’s also worth noting that the market has been consolidating a bit here recently, and therefore you need to look at the 0.89 level as being important. If we break above it, then I think we could go quite a bit higher. However, looking at this chart you can see that the 0.8750 level has offered a significant amount of support, especially near the 50-Day EMA sits just below there.
Noise Ahead
Because of this, the market is likely to continue to see a lot of noisy behavior as we are waiting to see where the global economy goes. There are a lot of noise in both economies, but it should be noted that it appears the British economy is in much more trouble than the European Union is now. Because of this, it does have to be looked at as a market that could very well be a “buy the dip” type of situation. However, if we turn around and break down below the 50-Day EMA, you cannot argue with the market, and you would have to assume that the traders out there will look at this through the prism of being negative in that environment.
I don’t think that happens easily, but if it does, we could see this market drop down to the 0.86 level. The 0.86 level is an area that also features the 200-Day EMA, so I do think it makes a certain amount of sense that we would see the market really start to find a lot of buying pressure in that area. Anything below there opens the floodgates down to 0.83 level, but that obviously would take a huge shift in momentum. As things stand right now, breaking the 0.89 level seems much more likely.
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