The EUR/GBP pair had a very negative session on Tuesday, breaking below the 0.80 handle yet again. The shooting started formed on Monday of course was the first sign that the market was about to fall apart, but what I believe is truly driving this market is the British pound itself, not necessarily some kind of concern with the Euro. After all, the EUR/USD pair did in fact shoot straight up during the session, but the GBP/USD pair has broken above significant resistance on the longer-term charts, which means that the British pound should be free to go much higher in general. I believe that this move in this market is simply a function of that.
I’m not ready to quite start selling yet, as this market has a little bit of support just below, and I think a move below the 0.7950 level is in fact that the “green light” to start selling again and aiming for much lower levels. In fact, I believe the 0.75 level is where this market is getting ready to go, but it will take quite a bit of time to get down there obviously. On top of that, this pair tends to move very slowly, but keep in mind that the pip value is much higher as well. In other words, you don’t need as big of a move to make money.
Don’t fight the trend.
The candle is very strong looking for the sellers, and as a result I think that there will be continued pressure. After all, we did manage to close at the very lows of the day, so this means that there should be plenty of selling pressure today as well. With that, I think that a breakdown is imminent, and it should be a nice move waiting to happen, but it is not until we close below the level that I’m willing to actually risk trading capital. Ultimately, I will not fight this trend as it is obviously in favor of the British pound, and I think any bounce from here should be a nice selling opportunity.
