EUR/GBP Forecast May 18, 2017, Technical Analysis

The EUR/GBP pair initially fell on Wednesday, but found enough support near the 0.8550 level to turn things around and break above the 0.86 level late in the day. This is a bullish sign, and I believe that the market will continue to go higher from here once we make a fresh, new high. I have no interest in shorting this pair, least not until we break down to a fresh low and underneath the 0.8550 handle. If we do that, then I think that the market will probably go looking for the 0.85 handle at that point. One thing I think you can count on is going to be a significant amount of volatility, mainly because of the British leaving the European Union. This is essentially “Ground Zero” as far as currency traders are concerned as far as that issue relates.

Buying on the dips

I believe that buying on the dips is probably the best opportunity to make money in this market, and therefore we have seen a nice trading opportunity in the middle of the Wednesday session. If the lows continue to make higher lows, there’s no reason to think that we won’t continue to see buying pressure of the longer term. I don’t have any interest in shorting, least not until we break down below the 0.85 handle for a significant amount of time, and right now it doesn’t look like it’s going to happen. It seems as if the European political situation has stabilized the bed, least and the short-term, and that is good for the common currency in general. Because of that, we may continue to see the market favor the upside here. However, keep in mind that headlines could come into the marketplace and cause quite a few headaches.
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