EUR/GBP had a positive session on Tuesday as the Euro continues to show gains. This is an interesting turn of events for me personally, as I have noticed that the British pound seems to be picking up steam again. After all, it was just a couple of days ago when we broke out of the 1.58 level in the GBP/USD pair to signal a massive move higher.
By all means, it does look like the British pound should strengthen over time. This is true about many other currencies, not just the US dollar. The Euro by comparison, has a dark cloud around. True, the Euro has done fairly well over the last several weeks, but the truth is that there is a ton of uncertainty in the European Union right now, and this is never good for investors.
0.80
The 0.80 level is without a doubt the most important level on this chart as far as I am concerned. I see this as a sort of full grown or midpoint for the bulls and bears. If we are below this level, without a doubt we can only sell this pair as it is in such a downtrend. However, if we get above the 0.80 level, it's time to start looking at the strength of the downtrend overall. Once the 0.81 level is cleared, it appears to me that we will have a significant momentum change at that point in time and would have to consider abandoning short positions.
The candle for Tuesday was strong, but you will notice that we stopped at the 0.7950 area, which is the beginning of the massive block of resistance. I will look at the chart as a "sell only" market, and look for weak candles between the 0.7950 level, and the 0.81 level. If I get that, I won't hesitate to sell as the trend has been so strong to the downside. Also, just as I stated earlier in this article, the British pound does look strong overall. Because of the strength of the Euro short covering rally, it will be prudent to wait until we get a daily close to make any trading decisions sell. With this in mind, I will look at the charts at the close of each session for signs of weakness.