The EUR/GBP pair fell during the session on Tuesday, continuing the negativity that we have seen for months now. However, recently we have seen a little bit of a pullback in the downtrend, and a test of the 0.80 resistance barrier. This area was once rather supportive, so it doesn’t surprise me at all that the sellers couldn’t get back above it. However, you can see that there is a slight uptrend line that has followed the market over the last couple of weeks. With that, the market looks as if it could break down here but we need to get below that uptrend line in order to feel comfortable selling at this point. I do believe that’s what will happen given enough time, but right now patience will be crucial.
With that, I think that the market will then head to the 0.7875 level, which is the recent low. A break below there is extraordinarily bad for the Euro, and as a result I would start adding to a position the sell side. I think at that point in time, the Euro would be in serious trouble.
Multiple targets.
The breaking below of the 0.7875 level since this market looking for the 0.7750 handle, and then perhaps the 0.75 level below there. That of course is a large, round, psychologically significant number, and is important on the longer-term charts. That would be an area where we could see buyers step back into the marketplace in a significant bounce happen. However, in the meantime I am much more interested in selling this market than worrying about any potential bounce in the future.
On the other hand, if we do get above the 0.81 handle, and that point time I feel that the market would in fact have changed the trend, and therefore I would be buying this market only. The meantime though, and to let happen they simply have no interest in buying the Euro over the Pound, and therefore remain ultimately bearish. Also, watch the GBP/USD pair, for if it rises, this pair should continue to fall.
