The EUR/GBP pair broke higher during the session on Tuesday, testing the 0.74 handle. This is an area that has caused quite a bit of resistance previously, so I believe that the sellers will probably be somewhat active. However, I believe that the strength that we have shown on Tuesday may be another hint as to where we’re going next. After all, this area has been important, and as a result it will take a significant amount of momentum to break out to the upside.
Because of this, I believe that if we can break above the recent high which is roughly the 0.7425 level, it’s time to start buying again. The Euro looks strong during the course of the last couple of sessions while the Pound is starting to fall apart. Because of this we have a bit of a “perfect storm.”
Buy only
At this point in time I consider this market to be “buy only.” This is because the most recent low is much higher than the one before, and as a result it looks like the market is going to continue to favor the upside. After all, the 0.74 level is just above but we closed towards the very top of the range. That of course suggests that the market is very strong and will more than likely continue the move.
Any pullback at this point in time would more than likely be looked at as value. If we pull back and find any type of support, I would be a buyer as it will more than likely be yet another attempt to break out above. On the other hand, if we close above the recent high, that shows the buyers have taken control again and we should then head to the 0.75 level.
Selling isn’t even a thought at this point, and as a result I am simply waiting to get buying opportunities in this particular marketplace. In fact, at this point in time I don’t even have a scenario which I start selling again.
