The EUR/GBP pair did another neutral candle for the session on Thursday, which just leads me to believe that this area around the 0.84 handle will continue to be very solid support. Because of this, I believe that the market is entering an "accumulation phase", which simply means that the "smart money" is starting to buy down here at this low level. I think that the support should hold, especially considering that we try so hard to break it down but simply cannot get the markets to do so.
Going forward, I think we get above the 0.8450 level, we would see the market go much higher, possibly to the 0.86 handle before it's all said and done. Above there, I see a significant amount resistance, so I would not expect much more than that out of this pair. Besides, historically this pair tends to do very little and as a result it tends to be a short-term traders market at best.
Watch the US dollar
Watch the US dollar. This means that the value of both of these currencies against the US dollar continued idea on which one is going to be stronger. Right now, the British pound has taken off against the US dollar, but the euro is starting to show massive signs of strength as well. Because of this, it will be very interesting to see how this plays out, but I believe that the support should be a bit too strong to break this market down. Remember, both of these currencies are doing fairly well so there really no reason for this market fall drastically.
However, if we do break down below the lows that we sold during the Wednesday session, I think at that point time the market marches down to the 0.83 handle, and possibly the 0.80 handle before all of that is said and done. Until then, I'm not real sure how I could sell this market, unless of course we saw a resistive candle somewhere much higher than where we are now.
