The EUR/GBP pair fell during the Friday session, but bounced enough to form a hammer at the end of the day, and right on top of the previous consolidation area – practically screaming its time to start buying. This is basic and classic technical analysis in action, and as a result I am buying on a break of the top of the hammer in order to aim for the 0.86 level eventually.
However, be aware that the 0.85 level could cause problems, and because of this I think that the pair should be thought of as a longer-term trade, even though I am only aiming for about 130 pips or so. This market tends to move slowly, mainly because of the interconnectivity of the two economies. This of course means that patience is necessary. But in the end, this pair moves just like any other pair, but you have to keep in mind that the pip value is larger than other markets, so it doesn’t need to move as far or fast as the others.
EU exiting recession, UK doing “Okay”.
The European Union exiting recession certainly doesn’t hurt the prospects of this pair going higher, even though the United Kingdom is doing alright. The pair has been going higher for ages, so a continuation, albeit slight, of that wouldn’t be a surprise. The real question is going to be whether or not we can break above the 0.86 level in the end. If we can, we should start to see this market really accelerate to the upside, and possibly even as high as 0.88 in the relatively near term. Until then though, expect small moves, and be prepared to “set it and forget it” when it comes to buying this market. It simply won’t create many fireworks going forward.
The European Union economic numbers should be followed, with special emphasis on Germany. This will guide this pair higher, and as a result be your best friend when buying. At this point in time, I see no real chance of selling this pair at the moment.
