- The euro rallied a bit after initially gapping lower during the volatile open on Monday.
- We pierced the 200-Day EMA, pierced the 0.86 level, and then attempted to pierce the top of the Friday candlestick. All things being equal, this is a relatively strong sign, for both buyers and sellers.
What I mean by this is that we have seen quite a bit of momentum jump into the market and try to take advantage of “cheap euros”, but at the same time, we have seen a significant pushback by the resistance area that had been so important over the last several months. Nonetheless, this is a market that looks as if it is forming some type of accumulation phase, and therefore it’s worth noting each move. I think if we can break above the 0.8650 level, is likely that this market will continue to go higher. However, this is a situation that is probably going to continue to be very noisy, and that is rather typical for the EUR/GBP pair under the best of circumstances anyways.
At this point in time, I believe that the 50-Day EMA underneath near the 0.8570 level offers plenty of support. We have been gradually grinding higher, so it’ll be interesting to see whether or not that pattern continues. That’s probably the best way to describe this pair, it’s one that grinds a lot, not necessarily trends, unless there is something specific that happens in the market. Currently, this is a market that just looks like it is essentially killing some time, trying to build up the necessary momentum to go higher.
Top Forex Brokers
Position Sizing Matters
Position sizing matters in this pair, because to begin with, each PIP is worth quite a bit more than most other larger currency pairs. Furthermore, it does tend to be very choppy which makes sense, considering just how intertwined both of these economies are. Yes, I understand Brexit happened, but at this point in time, the 2 economies is still highly interdependent, no matter what the bureaucrats or news tries to tell you. A simple analysis of money flow shows how that’s true. Furthermore, the European Union looks to be exiting a recession, so it does make a certain amount of sense of money flows euro as a result. With this, I am cautiously optimistic, but not aggressively bullish.
Ready to trade our Forex daily forecast? We’ve shortlisted the top forex brokers in the industry for you.