- The euro has rallied a little bit against the British pound as we have tested a major area of support right around the 0.8525 level.
- Ultimately, this is a market that has been consolidating for some time, but recently has seen a major plunge.
- With that being the case, it looks as if traders are trying to do everything, they can to find a little bit of value here, and therefore, it would not surprise me at all to see this market rally.
- However, this pair doesn’t move very quickly most of the time, so that is something worth thinking about.
That being said, I think the 0.86 level is an area that you need to pay close attention to as it could be an area of resistance. We also have the 200 day EMA sitting there as well. And that, of course, comes into the picture as a potential barrier that will be very difficult to overcome. Underneath we have the 0.85 level, an area that has previously shown itself to be supportive.
Round Number Attracts
We also have to keep in mind that it is a large, round, psychologically significant number that in and of itself does take a certain amount of attention into the EUR/GBP market as well, regardless. When I look at longer term charts, the 0.85 level is an area that a lot of people have paid attention to for a very long time. This is an area that goes back years, so it is worth paying close attention to if we get there anytime soon.
In other words, we could be close to a major swing low, but that doesn't mean you jump in right away. Remember, this pair is rather choppy under the best of circumstances, so you do have to look at this through a longer term kind of basing pattern situation. This can take a lot of time, and therefore you have to be very patient with this kind of pair, where the two economies are so intertwined at this point.
Ready to trade our Forex daily forecast? We’ve shortlisted the top forex brokers in the industry for you.