- The EUR/GBP continues to bounce around in a relatively tight range, as we initially rallied to reach the 0.88 level, but then turned around to show signs of weakness again.
- Just underneath, the market is sitting right around the 50-Day EMA and looking for some type of directionality.
- However, we have sliced through the 50-Day EMA previously, so it does suggest that it is only tentative support at best.
When I look at this chart, the 0.88 level above is a resistant barrier, while the 0.86 level underneath offers significant support. Furthermore, the 0.86 level underneath also has the 200-Day EMA hanging around it, so that obviously will attract a certain amount of attention. The market continues to see a lot of back-and-forths, and it’s possible that we can look at this through the prism of a consolidation area in a 200 PIP range between the 0.88 level in the 0.86 level
Pay Close Attention to the Market
If we were to break down below the 200-Day EMA, it opens the possibility of dropping another 200 pips, perhaps down to the 0.84 level. You must keep in mind that this pair does tend to move very slowly, so it’s going to take a while to get down there if we do in fact see that breakdown. On the other hand, if we turn around and break above the 0.88 level, then it’s possible that we could go looking to the 0.90 level, an area where we had blown through quite viciously after that nonsense coming out of the UK with the budgetary concerns. The 0.90 level is an area that has a lot of psychology attached to it, but it also looks like it has a lot of selling pressure around it as well.
I think if you employ some type of sideways and choppy trading system, you have the likelihood of success as this pair tends to do that quite a bit anyway. At this point, it looks as if there is probably more downward pressure than up, but not enough to break things below the 50-Day EMA. Ultimately, I believe this is a situation where short-term day trading will probably be the best way going forward. If you can stay nimble, this might be a good market to pay close attention to them.
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