Potential signal:
- I am buying now.
- I have a stop loss at 0.8720 and target of 0.8850
EUR/GBP attempted to rally before reversing sharply, largely in response to the UK budget, though the broader uptrend remains intact. Key support levels are approaching, and market memory suggests the pair may soon attempt another move higher.
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The euro initially tried to rally against the British pound during trading on Wednesday, but we've seen a complete collapse since then. Most of this is probably due to the budget coming out of the United Kingdom, but quite frankly, I don't think much has changed. Ultimately, this is a market that has been in an uptrend for quite some time. And while we have seen a reprieve for the British pound, we haven't exactly changed trends yet.
We are approaching the 0.8750 level, an area that previously had been a major resistance barrier. Therefore, I think a certain amount of market memory comes into the picture to offer support. The 50-day EMA sits there as well. So, I think you have to look at that as another reason to believe that the market is probably going to try to go higher eventually. If we were to break down from here,
Watching Support Layers Below
Then the 0.8650 level gets targeted, followed by the 200-day EMA, which is right around the crucial 0.86 level, which had been support previously as well. I do expect to bounce from here, but again, this is a pair that is very choppy to say the least. This pair does tend to be more of a grind than anything else. So be aware of that. You will have to be very patient to see how your trade plays out. If we can break to the upside, the measured move of the previous consolidation area does suggest the 0.89 level, which is a major resistance barrier going back several years. I do think at this point in time, these moves are probably somewhat nonsensical and noisy, leading more or less to a range more than anything else. I believe that range is being tested to the bottom at the first signs of a bounce. I have no issues whatsoever buying this pair.
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