EUR/GBP had a fairly quiet session by the time the close of Monday came. However, it doesn’t mean that there wasn’t some kind of action. In fact, I see a lot in this chart, and also have noticed a few things in the EUR/USD and GBP/USD pairs. (The analysis I used is something called triangulation…..which in these three pairs is very useful most of the time.)
The EUR/USD pair sold off during the session on Monday, but did manage to recover about half of the losses. The resulting candle was a hammer, so this was bullish. However, the GBP/USD did the same thing – but has been for weeks. The cable pair simply looks like it is ready to make a serious attempt at breaking out above the 1.57 – 1.58 resistance area in order to continue much higher.
The EUR/GBP pair should by all rights show a bit of Euro weakness. After all, the currency is “less good” against the US dollar, which is of course the standard by which all currencies are measured. The fact that we had a fairly wide range, but essentially went nowhere after rallying suggests to me that the bullish pressure is starting to wane a bit.
0.80
The area that this pair is approaching is also considered to be resistive based upon the fact that it was once supportive. This is a basic building block of technical analysis, and the pair looks as if it found a bit of pushback during the Monday session.
The triggers for selling this pair are numerous, but the most basic is simply to see the pair fall below the low of the Monday session. The lows of the Monday session filled a gap from the weekend, albeit a small one, and this suggests that if we can get below it – the support has fallen apart.
The other sell signal will be based upon a weak candle in the vicinity of the 0.80 handle. There is simply far too much noise above to think this pair will slice through it easily. As for buying, I don’t see an argument for that until we see a 0.8150 print in this market.