The EUR/GBP pair fell hard during the session on Wednesday, breaking below the 0.81 handle and beyond. In fact, we closed towards the end of the range at the bottom, and as a result I believe that this market will continue to go lower. With that, I think that the markets looking to continue to go lower, and with the concerns around the Euro at the moment, that really isn’t a big surprise. On top of that, we have the British pound which is showing signs of strength, so really it’s a bit of a “perfect storm.”
The shape of the candle is most certainly bearish, and we are most certainly in a downtrend. However, you have to keep in mind that this market does in exactly move quickly, so it is possible that this may be more of a grind down to the 0.80 level, which of course is a large, round, psychologically significant number. With that being the case, I would expect plenty of buying pressure in that area, and breaking down through it to be very difficult.
Follow the trend, sell the rallies.
Looking at this market, I can see that it is simply going to be a matter of selling rallies as they appear on short-term charts. This will be a very good market to scalp, and as a result, I expect a lot of short-term traders to be attracted that this type of action. After all, this is a market that moves at the speed of cattle, meaning that it doesn’t move very quickly, and as a result it’s very easy to scalp if you have a trend like we do at the moment.
Remember, the value of each pip is going to be roughly twice as much as many of the other currency pairs out there, so it doesn’t take his big of a move to make money here. With that being the case, this could be a nice “slow-motion” type of trade that you can be involved in. I suspect that there will be several opportunities to short this pair between now and the 0.80 handle.
