EUR/GBP Forecast May 15, 2017, Technical Analysis

The EUR/GBP pair broke higher during the day on Friday, breaking above the top of the shooting star from the previous session. I still think that there is a lot of consolidation waiting to happen, but quite frankly the weekly candle of course offered a hammer. This is a very bullish sign, and the fact that the gap was filled and showed signs of support suggests that this market will continue to go higher. I recognize that the 0.83 level below continues to be very supportive, and with that being the case I think that it’s not until we break down below there that it’s a market that we can sell. It will be noisy, but I believe that the market is going to try to make a move to the upside, perhaps the 0.87 level above. It will be an opportunity to buy on pullbacks that show signs of support.
“Brexit”
The United Kingdom is leaving the European Union, and the headlines coming from that of course will continue to move this market around. That will cause quite a bit of volatility, but given enough time it’s likely that the market will continue to be at the mercy of various comments from politicians on the continent and of course the British Isles. Ultimately, I think that the market looks as if it is ready to rally, but maybe just for the short term. There are a lot of longer-term questions to still be answered, and the market will await those to make a larger move. Until then, expect a lot of choppiness, but it looks like the short-term will favor the upside in this market, and therefore it’s likely to be a “buy on the dips” situation in the next day or so.