- The EUR/GBP has pulled back during the trading session on Tuesday, as a 0.88 level has offered a significant amount of resistance yet again.
- You can see that it has been difficult to get above for a while, as we continue to consolidate overall.
- If we can break above the 0.88 level, it would capture a lot of attention, perhaps sending a flood of new money into the market.
On the other hand, if we do break down from here, it’s possible that the 50-Day EMA gets targeted, and then the 0.86 level after that. The 200-Day EMA sits just below the 0.86 level, and I think that also will offer a lot of support in and of itself. Ultimately, this is a market that given enough time will have to make a bigger decision, but right now it looks like we are in a consolidation area worth watching. The 2 currencies of course are rather choppy against each other as they are each other’s biggest trading partner, it of course they faced similar problems right now.
Market Looks Neutral
Do not forget that both the European Union and the United Kingdom have major issues when it comes to energy this winter, and that situation has not gotten much better. Because of this, is very likely that we will continue to see negativity towards both economies, but when compared to each other, it’s like a lightweight boxing match. It’ll be quick and brutal, but nobody is seriously going to get hurt. Because of this, you must look at it through the prism of short-term moves, using the lines on the chart as both support and resistance barriers that you need to pay close attention to. This pair does tend to move in 200 PIP increments, and it does tend to be very noisy about it.
The market looks very neutral in general, but the fact that we have pulled back a couple of days in a row does suggest perhaps we could get a little bit of a drop here. Furthermore, if you do not choose to use this pair as a trading vehicle, you can often use this chart to determine relative strength or weakness against the US dollar when trying to decide on trading the EUR/USD pair, or the GBP/USD pair.
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