EUR/USD and GBP/USD Forecast
The Euro rallied a bit during the trading session on Wednesday, breaking above the top of the hammer from the Tuesday session, kicking off a perfect long signal. The 1.12 level is the bottom of the overall consolidation range, so it does make sense that we have seen a lot of buying pressure. Because of this, it suggests that we are going to continue to see a bit of a bounce from this area and that we will continue to trade in this 300 pips range. With that, I am a buyer of this market but I recognize that it won’t necessarily be the easiest of trades.
On the other side of the equation, if we were to break down below the 1.11 handle, we will probably see the Euro fall apart and go looking towards 1.10 level after that. In general though, with the weaker Federal Reserve is very likely that we will continue to stay in the same range that we have been in for so long.
The British pound rallied during the day after words of cooperation were uttered between the PM and Parliament, but quite frankly we’ve seen this before so it’s hard to get overly excited. If you choose not to worry about the headlines, you can simply follow what’s going on with the technical analysis, which currently suggests that we are trading back and forth in an overall range. The 1.30 level underneath is massive support, while the 1.3350 level above is massive resistance. As we are in the middle of this range, we are essentially close to “fair value”.
In that scenario it’s probably best to simply sit on the sidelines and wait for either a pullback to support, or a rally to resistance that you can trade off of. Trading in the middle here is simply gambling.