The EUR/GBP pair rose during the session on Thursday, but found the 0.8035 level to be too resistive yet again and we ended up going back to form a shooting star. The shooting star of course is a very bearish candle, and as a result I feel that this market could very easily fall again. The 0.80 level of course is somewhat supportive, simply because of the large, round, significant aspect of the number as far as trading psychology is concerned. However, if we can get below there, I don’t see any reason why the market will continue the downtrend that we have seen for some time now.
The Euro is in a lot of trouble, as the European Union continues to struggle overall economically. The British economy is starting to be a bit soft at this point, but there isn’t as much fear in the UK compared to the EU. With this, the market should continue to drift lower in my opinion. The shape of the candle also suggests this. The shooting star continues to be one of my favorite signals, especially when it is with the trend.
Several targets.
The market should drift lower to the 7850 level first, and then possibly down to the 0.7750 handle. In that area, I suspect that we would get a little bit of a bounce simply because it is an area that has been supportive in the past, and it is also a larger number that should also offer quite a bit of support.
Ultimately, I believe that we could drift lower, probably to the 0.75 handle as it is a massive words and as a result the market will more than likely target that area mainly because of the attraction of the large number. I see that the GBP/USD pair formed a hammer for the session, so I believe that the British pound should strengthen a bit as well. On top of that, the Euro is sitting right above the 1.33 level to the Dollar, so I believe that it makes sense that the Euro continues to drop against the Pound overall.
