- The EUR/GBP has pulled back rather significantly during trading on Tuesday, to reach down toward the 0.88 level.
- We are facing a bit of support, and of course the 50-Day EMA.
- Because of this, we need to watch what happens next, but typically these candlesticks do not happen in a vacuum.
- It would not be surprising at all to see a little bit of a follow-through candle appear next.
I believe at this point we will more likely than not going to see a lot of volatility in this area, but I think if we break down below the 50-Day EMA, we could go much lower, perhaps dropping down to the 0.8650 level. That would put it in the sites of the 200-Day EMA, which of course is an indicator that a lot of people pay attention to. I do believe that we’ve got a situation where the market will remain noisy to say the least, so it’s also possible that we see quite a bit of back-and-forth and confusing trading.
Buyers are ready to jump
The market is likely to see plenty of buyers, based upon the fact that we have been trending over the longer term to the upside. That doesn’t mean that we simply jump in anywhere, but it does suggest that perhaps the 200-Day EMA below could hold. After all, this is a market that is been very choppy, but there has been plenty of buyers willing to jump in given enough time. I do think this is a rather large candlestick, so I do think that it is probably going to continue to attract attention. However, the reality is that there seems to be a lot more hope in Europe than there is in the United Kingdom. To be honest, both of these economies are probably going to be struggling, as Europe is essentially a bug looking for a windshield, and the United Kingdom has already admitted that it was going to head into a recession. This is basically a fight between 2 sickly economies and therefore it will continue to show the same choppy and jagged behavior on the charts that it typically does. With that being said, if we were to break above the 0.89 level, there’s almost nothing stopping this market from going to the 0.90 level above.
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