EUR/GBP Forecast July 5, 2017, Technical Analysis

The EUR/GBP pair went sideways over the course of the session on Tuesday, as we continue to grind back and forth. The market is relatively quiet, and I think that will continue to be the case until we get some type of headline coming out of the negotiations between the United Kingdom and the European Union that spooks the market in one direction or the other. I believe that the 0.88 level above is massive resistance, and if we can break above there and close above it on the daily chart, the market could then go looking for the 0.8875 level above. Alternately, if we pull back from hearing breakdown below the 0.750 level, the market and then can break down to the 0.7 handle. Granted, this is a market that should cause quite a bit of choppiness due to all the various pressures in both currencies.
Headline risk
I believe that the headline risk will continue to be extreme in this market, as at any moment we could see sellers or buyers enter the market based upon random words coming out of both Brussels and London. Because of this, it’s difficult to hang onto a trade for any real length of time and I believe that we are going to continue to move in 50 PIP increments as the market tends to favor those levels. I think that short-term trading is about as good as this is going to get, it’s going to be difficult to buy and hold or sell and hold. With this in mind, you will have to be very quick and cautious. I think that small positions may be the best way to trade this market as we don’t have clarity and probably one for several months.