The EUR/GBP pair fell during the course of the day on Tuesday, breaking the bottom of the shooting star towards the end of the day that had formed on Monday. Because of this, I believe that this market is probably going to grind its way back down to the 0.70 handle. While the Euro looks fairly positive in general, the truth of the matter is that neither one of these currencies are exactly struggling in the short-term, so it really comes down to a matter of “relative strength” when it comes to this pair.
I think that the British pound continues to strengthen in general, and as a result should continue to drive this pair lower. However, I’m not looking for any type of meltdown. You do need to keep in mind that the value of the trade is quite a bit more than in other ones, so you don’t need massive moves to make profits in this particular pair.
0.70
I believe that the 0.70 level will continue to be a bit of a magnet for price, and as a result I am looking for a move back to that level. I think we can break down below there as well, probably testing the same areas that offered support as we bounced from 2 weeks ago. I don’t necessarily think that there is going to be much of a buying opportunity at this point. I think that there is significant bearish pressure at not only the 0.71 handle, but the 0.7250 level as well. With that, I remain bearish but I also recognize that this is probably going to be more or less best described as “consolidation with a downward bias.” In other words, I’m not looking for explosive moves but rather short-term trading opportunities from time to time to the downside. I believe that we are seeing that right now, and as a result I am going to start selling.
