EUR/GBP Forecast May 30, 2017, Technical Analysis

The EUR/GBP pair fell during the session on Monday, as the British pound did stabilize a bit and we have pulled back from a down trend line. Ultimately, if we can break down below the 0.87 handle, and it looks like we may, the market will probably go looking towards the 0.8650 level after that. Alternately, if we can break above the 0.8750 level, that will show that the downtrend line has been broken down and through, and we should now continue the longer-term uptrend. The market looks very likely to be choppy to say the least, but it appears that the British pound is starting to show signs of strength again, and that could give us a bit of a selloff in this market longer term. We’ll have to see what happens next, but right now it appears that the volatility is going to stay in this market place, so short-term back and forth trading might be what we end up seeing.
Pay attention to these currencies against the US dollar
Quite often, you can decide which way to go in this market based upon how they are behaving against the US dollar. For example, if one is stronger than the other against the US dollar, then that’s the direction you want to trade in this pair. It’s something that I call “triangulation”, as you can glean what’s going to happen in the EUR/GBP pair by paying attention to what happens in the EUR/USD pair, and of course the GBP/USD pair. By using relative strength and weakness, you can decide which direction to play this pair or one of the other 2 depending on which direction you’re going. I think this pair is going to directly reflect what happens against the US dollar as you can tell which one of the currencies is going to be better or at least “less bad” than the other one.