EUR/GBP Forecast May 26, 2017, Technical Analysis

The EUR/GBP pair had a very choppy session on Thursday, as we are grinding towards the highs again. I think that eventually we will break out to the upside but I also recognize that short-term pullbacks will be necessary in order to build up enough momentum and volume to continue to go higher. If we can clear the 0.8675 level above, then I think the market can go much higher, perhaps reaching towards the 0.88 level which is important on longer-term charts. Pullbacks of this point should attract plenty of buying pressure, especially near the 0.86 handle, as that area has offered support in the past. I would prefer to see a breakout first though, as it would make a “higher high”, and that of course is a very strong sign for the bullish market in general, and therefore should have the buyers getting excited.
Choppy markets
This market is typically choppy, and part of this is because of the interconnectivity of the 2 economies, but I think it is also going to be very choppy do to the United Kingdom leaving the European Union, and headlines crossing the wires, specifically in the form of comments coming from officials from either government, will cause quite a bit of noise in this market. I still believe in the uptrend though, it certainly has been strong as of late but I also recognize that pullbacks will happen from time to time. If we managed to break below the 0.8550 level, I think the market will roll over significantly at that point. My suspicion is that it will have something to do with the headline, so therefore could be rather rapid if it does happen. As things go now though, it seems clear that the buyers are the stronger.