The EUR/GBP pair is one that I don’t want to trade very often. This is simply because it tends to chop around a lot, as one would expect considering that the two economies are so heavily intertwined. However, I do recognize that there is a short-term signal in this market that is being shown now, so therefore I went ahead and bought a small position.
The 0.82 level has been an area that has attracted quite a bit of interest by traders in this market. We have shot through it again, showing a significant amount of support, but more importantly breaking the top of the Thursday and Friday “double top” from a short-term perspective. Breaking above that level suggests that the market is going to go ahead and continue to consolidate at the very least. In that scenario, I don’t see why this market will reach the 0.8350 level. Above there, things get a little bit more difficult, but between here and there I don’t really see any major problem with it.
Choppiness will continue, don’t get married to the position.
Like I said before, this pair tends to be very choppy over the longer term. You do not want to get married to the position, meaning that a quick “smash and grab” type of approach is probably what you need to do. I would not be looking to hang onto this position above the 0.8350 level, and quite frankly expect the area above there all the way to the 0.8450 level to be very noisy and highly resistive. With that, I’m actually looking to sell from somewhere in that general vicinity if we get the right candle, such as a shooting star or a bearish engulfing one.
The British pound should continue to strengthen overall, and I don’t think that it’s going to be much different against the Euro. Granted, there will be hiccups along the way, but ultimately I believe that the British pound will continue to be one of the stronger G 10 currencies out there. With that, I am actually bearish but recognize that the next 100 pips probably belong to the buyers.
