EUR/GBP Forecast May 10, 2017, Technical Analysis

The EUR/GBP pair fell slightly during the day on Tuesday, reaching towards the 0.84 handle underneath. I believe that is an area that should cause a significant amount of support, but if we can break down below there then we start to look for the 0.83 handle. If we can break down below that level it becomes a catastrophic selloff in my estimation based upon the longer-term charts and the possibility of a head and shoulders triggering.

Short-term bounce?

It looks as if the markets could bounce from here, but there is a significant amount of noise above so I think it’s going to be short-term at best. I suspect that the 0.8450 level will be resistive, as well as the 0.8475 level. Because of this, I look for short-term bounces as an opportunity to sell this market based upon exhaustive candles. While some of you may be tempted to take a long position here, I believe that the downward pressure continues, because of the strength that we have seen in the British pound overall, and of course all of the issues that we see in the European Union. If we managed to break above the 0.85 handle, at that point I would expect this market to go much higher. It is not until then that I am comfortable buying, but if you or a very short-term trader, you may have the opportunity to do so fairly soon. I believe that a breakdown is more likely than not, but it’s going to take some time to happen as both of these currencies have a lot of questions around them due to the split of the United Kingdom from the European Union. No matter what happens, I believe that the markets will be extraordinarily volatile.
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