- You can see that the Euro initially rallied against the British pound during trading on Tuesday but has given back gains and the crucial 50 day EMA.
- This is a pair that's been in a downtrend for some time.
- Despite the fact that the Bank of England has recently cut rates, there is still a huge problem in Europe when it comes to lack of growth.
- The question now is, will the UK follow suit?
Relative Game Here
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Well, I don't know if they will, but I do know that when you look at two currencies, it is a relative game. The question now is which one is going to end up being the victor of the two? Well, when you look at this pair, you can see we've been in a downtrend for some time. But it's also worth noting that the 0.8250 level is an area of significant support. So, I think this remains more or less a choppy market, but I do favor fading short term rallies that show signs of exhaustion as the market is most decidedly heavy.
The 50 day EMA has attracted some attention. And I think at this point in time, if we do break down from here, we could revisit that 0.8 to five zero level. On the other hand, if we can turn around and break above the 0.8375 level, we could challenge the 200 day EMA, followed by the 0.8460 level. This is a market that tends to be very choppy and noisy, so you have to pay attention to your trades on a short-term basis because it doesn't move very much most of the time. However, keep in mind that the PIP value is much higher than most currency pairs, so it doesn't need to. At this point, I still favor shorting, at least for now, but I do believe that we are getting close to some type of bottoming pattern. Expect a lot of choppiness going forward.
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