By: DailyForex.com
The EUR/GBP pair tried to rally during the session on Friday, but as you can see the 0.86 handle offered resistance yet again. This market has been stuck in this consolidation area for some time now, so the fact that we could breakout above really wasn't that big of a surprise. With interesting to me though is the fact that we have two shooting stars in the last three days. Because of this, I believe that this resistance will end up keep the market down, and as a result a break of the lows for the Friday session is enough of a reason for me to start selling.
.jpg "EUR/GBP may 27")
Do not misunderstand me, this market isn't exactly ready to melt down. However, I do see continuation of the consolidation that we've seen for some time, and no real catalyst to break out of this box. On the upside, the 0.86 level is the site of a gap from the middle of March, and the 0.84 level is a massive supportive area on the long term charts as well. In fact, that area extends all the way down to 0.83, so I really need to see that level broken to the downside in order to get short of this market for any real length of time.
It will work until it doesn't
I believe that shorting near the 0.86 level and buying near the 0.84 level is the only way to play this market. I also believe that the best way to think about it is that it will simply work until it doesn't. These consolidation areas do eventually break, and when they do is normally fairly significant. However, if you are to trade something like this you can certainly make quite a bit of profit before having that losing trade. After all, if you have four or five positive trades and eventually have one losing one, you're doing your job - you're making money. Try not to make things more complicated and the need to be, and this particular currency pair is a perfect example of that sentiment.