EUR/GBP Forecast September 26, 2017, Technical Analysis

The EUR/GBP pair gapped lower at the open on Monday, but then slice below the 0.88 level underneath. We have bounced a bit towards the bottom of the recent consolidation range, which has been significant as of late. If we do rally from here, I think that we could be trying to build up a base for a longer-term move, but we would have to clear the 0.89 level to feel comfortable going long. Alternately, if we break down below the 0.877 level, then I think the market could reach towards the 0.87 handle underneath. However, if we do break down I believe that we probably go farther than that given enough time. The markets will more than likely go looking towards the 0.85 handle, which has been supportive in the past.
On the break higher, this market will probably go looking towards the 0.90 level, which of course is very important. It’s a large, round, psychologically significant number, and the clearance of that level should send this market much higher. I think that the 0.88 level is going to continue to cause quite a bit of volatility, mainly because of the importance of this level on the longer-term charts. This is a market that is going to be kicked around by headlines coming out of both London and Brussels, as the recent Brexit taken front and center. Ultimately, that will continue to keep this market very choppy, but for those who can handle the volatility, this could be one of the better trading pairs out there. In the meantime, I anticipate a lot of back and forth and consolidation, as the markets will be noisy, but have several levels that will continue to cause major issues in both directions. Remember, this pair doesn’t need to move as much to generate profits as the tick value is higher.