- The euro has gone back and forth for the fourth day in a row against the British pound, showing extreme amounts of pressure.
- At this point, the market is sitting just above the 50-Day EMA, but more importantly, is hanging around the 0.86 level, an area that had previously been a major resistance.
- Because of this, it of course attracts a lot of attention due to the fact that we recently formed a bit of a “bottom”, but I also recognize that the market had previously been in a major downtrend so with that in mind, I think you have a situation where you have to look at this through the prism of whether or not we have any momentum.
Major breakout coming
I do think that a major breakout is coming out of this range from the last couple of days, but right now your job as a trader is to simply sit here and recognize what happens. You don’t want to “front run” the potential move, due to the fact that whatever you pick could very well be the wrong direction. Ultimately, I think this is a market that will continue to be very noisy and that does make a certain amount of sense considering that the pair is notoriously choppy to begin with. However, we will eventually have to get some type of resolution and it does set up for a nice potential trade.
At this point, the 200-Day EMA of course will attract a certain amount of attention, and with that being the case it does suggest that the market breaking above there would really start to have a massive influence on what happens next. I can say the same thing about the 50-Day EMA as well, as it could open up the move back into that previous noisy area. However, I don’t necessarily think that we have as much downside is one would anticipate due to all of the noise underneath and of course the fact that we have the 0.85 level offering psychological support.
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