The EUR/GBP pair fell during the session on Monday, closing below the 0.80 handle again. After forming two shooting stars in a row last week, this is not much of a surprise as it appears that the buyers have run out of steam a little bit at this point. However, we have a clear resistance level above that if it should get broken, should send this market much higher. The 0.8030 region shows significant resistance for the second time now, and as a result we feel that a move above there has this market going much higher.
Ultimately though, we believe that the downtrend could very well continue to push this market lower but we need to see a fresh, new low in order to be as confident as we once were. This could also be simple consolidation at the bottom of the marketplace, perhaps signaling either a continuation coming, or the so-called “accumulation phase”, when the smart money reenters the marketplace
Nothing has been proven yet.
The tricky part of this chart is that neither one of those above two scenarios have been proven quite yet. After all, we could very easily continue lower and to be honest that’s probably what a lot of traders are out there thinking. However, the 0.79 region is relatively supportive on the monthly chart. That means that there is a lot of money sitting there and waiting to lift the market. So the question then becomes whether or not we can break down below there, or are we simply just going to grind sideways and run out of steam? It’s difficult to know right now, but in the very short-term, I believe that a break down below the lows for the Monday session should send this market looking for roughly the 0.7925 region. That area is about as long as I would be wanting to hold a short position in this market at the moment, knowing that I could easily reenter on a fresh new low. On the other hand, if we break above the 0.8030 level, this market could very easily go to the 0.8150 handle.
