EUR/GBP Forecast May 19, 2017, Technical Analysis

The EUR/GBP pair initially fell during the day on Thursday, as the .86 level offered far too much resistance. As we fell though, we found enough support at the 0.8525 level to turn things around and bounce. I believe that the uptrend continues, as we are testing would could be thought of as an hourly trendline. This market is going to continue to be choppy due to the ongoing talks between the United Kingdom and the European Union obviously, so headlines of course can come in and cause issues. Ultimately, both currencies are doing reasonably well against the US dollar, so I think this is a fight between 2 of the favored major currencies right now. That tends to lend the market to volatility and choppiness, and this pair tends to be both of those anyway.

Buying on the dips

So far, the uptrend has been a “buy on the dips” type of situation, and I think we will continue to see that be the case. Because of this, I think the pullback that we have seen during the day on Thursday represent value that you can take advantage of. I would expect that the trend should continue, unless of course something comes out of the headlines or more specifically, some politicians mouth. Longer-term, I believe that the pair is probably going to go looking for the 0.8625 handle, and then perhaps the 0.87 level after that. If we broke down below the 0.85 handle, then the market will be very soft, and perhaps continue to fall significantly. It’s not until then that I am comfortable shorting this market, as we have seen a stubborn bullishness to this pair, even as the British pound has strengthened in general. With this being the case, I remain cautiously optimistic.