- The Euro rallied significantly during the trading session on Wednesday, as we continue to try to attempt a recovery and after the massive selloff at the open of the week.
- Yes, the world still has to figure out what to do with the information when it comes to the European Union Parliament votes shifting to the “right”, but at the end of the day it’s very possible that this will have been for not.
After all, the GBP/USD market is currently in the extremely oversold area on the monthly chart, so I do think it makes a certain amount of sense that we return to a bit of stability. The 0.85 level above could very well be the target, because not only is it a large, round, psychologically significant figure, but it is also the top of the gap from the Monday open, or at least within a few pips of it. Ultimately, this is a market that has found itself extremely oversold, and all it would take is a little bit of euro strength, or perhaps signs that the United Kingdom economy is starting to cool off a bit to send this market right back around.
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EUR/GBP Technical Analysis
When I look at this Forex trading chart, I do think that we are in an oversold position and the 0.85 level as my short-term target. If we can break above there, the 50-Day exponential moving average can be found at the 0.8540 level and breaking that of course would be a very bullish sign. In that environment, the market could very well go looking to the 200-Day EMA, which is near the 0.8580 level. Anything above there could really start to get this market bullish, but I don’t necessarily think that will be easy.
Remember, the average attitude of the EUR/GBP currency pair is essentially sideways and choppy, so it would not be surprising at all to see this market essentially bounce around in this overall region. However, if we were to continue to sell off, the 0.84 level should be a significant support level. Anything below that could really start to send the market into some type of tailspin, although it doesn’t look like that will easily be accomplished.
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