Potential signal:
- I am taking what the market gives me.
- At the bottom of the range, i.e. near 0.8540, I am buying with a 20-pip stop and aiming for a 40-pip gain.
The Euro has been fairly quiet on Tuesday against the Pound, but this is a market that is heavily influenced by external factors at the moment, as is almost everything else.
EUR/GBP
The Euro has been fairly quiet against the British Pound during the trading session on Tuesday, which, when you look at the overall currency markets, is essentially what we are seeing in all pairs. I think part of this comes down to the uncertainty when it comes to the Middle East and what happens next with the energy supply.
Top Regulated Brokers
When I look at this chart, it's easy to see that the 50-day EMA has offered resistance as of late. And as a result, we have formed something that looks kind of like a bullish flag, but it would need to break above the 50-day EMA to be convincing. If we were to break down below the 0.8525 level, then perhaps we go looking to the 0.8450 level.
The British offer a higher yield than the European, so as far as the interest rate situation is concerned, that makes the most sense. The question is whether or not the Europeans are going to be getting closer to hiking rates.
Energy Supplies and European Rate Decisions
There is a whole long list of reasons why that may not be the easiest thing to come to terms with, not the least of which being whether or not they have energy this winter to power the industrial base of places like Germany and France.
Ultimately, in the short term, this looks like a consolidation area between the 0.8540 and the 0.8580 level. The candlestick on Monday certainly was negative, but it wasn't exactly a wipeout candlestick either. So I think we are basically on hold here, trying to figure out which way to go, but we do have that little range to dictate where the next move may head to if you are patient enough to wait for a daily close outside of that 40-pip range.
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