The EUR/GBP pair rallied during the session on Friday, in what is a relatively quiet market. At the end of the day though, we are closer to the bottom of the larger consolidation, and as a result I feel that the market can only be bought, and not sold as we are getting fairly close to an area where quite a few buyers are to be found. This is especially near the 0.70 level, as it is not only support based upon the charts in front of you, but the fact that it is a large, round, psychologically significant number.
What I find interesting about this market is that the Euro looks like it’s “cheap.” With the Greek referendum being voted on this Sunday, there is a possibility that we could get a pretty significant move. Ultimately though, this market will more than likely continue to consolidate over the course of the longer-term, between the 0.70 level on the bottom, and the 0.74 level on the top.
Buying dips
I believe that buying dips going forward all the way up to the 0.72 level will be the way to go going forward. The market has been fairly reliable and its consolidation, and as long as we don’t break out of this region, it’s hard to imagine placing a trade in this market. There is a lot of volatility above, and as a result this market will probably be very choppy going forward. It really doesn’t matter what happens until we break out of the range, choppiness will be the way to go going forward and as a result you will probably want to keep your position sizes fairly small.
With this, the other possibility is to play Forex options, if you have is available. Binary options could work as well, and although I like the consolidation being so obvious, we have to have the right set up. At the moment, if we can break the top of the range, specifically the 0.7150 level, I would be bullish of this market as we went forward.
