The EUR/GBP pair broke higher during the course of the session on Tuesday, breaking above the top of the hammer that had formed on Monday. This of course is a bullish sign, and I believe now we are going to head towards the resistance barrier at the 0.74 level. Ultimately, if we continue to go higher, I believe that it’s only a matter time before we grind our way to the 0.74 level, but it is not going to be easy. Because of this, I believe that you will have to look for short-term pullbacks in order to buy a short-term position.
This is not the type of market that facilitates itself the longer-term moves at the moment, but I also recognize that selling is almost impossible as we have seen such a massively impulsive candle last week. That should offer plenty of support. One sign that the support is giving way could be a break down below the bottom of the hammer, which of course formed on Monday. If we did break below there, at that point in time I would have to assume that the sellers would try to reach towards the 0.70 level given enough time.
Volatility
The one thing that we can count on is volatility at this point in time. We believe that the market should continue to be choppy overall, but right now I have to think that the upside is stronger of the 2 probabilities. Keep in mind that this market has a larger pip value than most other currency pairs, so the moves don't have to be as big for you to profit over here as it would in other markets. Ultimately, we will have to break out of this consolidation area, but it doesn’t look like we are ready to do so anytime soon. The fact that it is now getting close to the middle of December also means that we may not have enough momentum to leave this area overall.
