EUR/GBP Forecast May 16, 2017, Technical Analysis

The EUR/GBP pair fell initially during the day on Monday, but found support near the 0.8450 level. We bounce from there and broke above the 0.85 handle. At that point, we have found enough resistance to look like we are going to start falling. The Stochastic Oscillator has reached an oversold area on the hourly chart, and started crossing as if we need to pull back. This is a pair that doesn’t typically move very far in a single session, so that’s not a surprise, and I believe that the 0.8460 level is where we are heading. That area should offer support as it did in the past, so I think that short-term selling opportunity is presented itself, but that’s about all it is. The pair will of course be very volatile due to the conversations involving the United Kingdom leaving the European Union.

The alternate scenario…

The alternate scenario of course is a breakout to the upside, so we can clear the 0.8515 level, I think that we will continue to go higher, reaching at least to the 0.86 handle above. This is a market that has been very choppy as of late, so it would not surprise me if we could see either one of these trading opportunities. I believe that a breakdown below the 0.8450 level would be very negative, but right now I don’t see anything that suggests the market is going to do so. The markets continue to be very impulsive from time to time, but the market should offer plenty of trading opportunities in both directions. Small positions may help, especially considering that the PIP value in this pair is almost twice what it is and other major pairs. This market will continue to react to headlines and statements coming from politicians on both sides of the English Channel.