EUR/GBP Forecast October 27, 2017, Technical Analysis

The EUR/GBP pair rallied initially on Thursday, reaching towards the 0.8950 level. However, we turned around to fall significantly and reach down towards the 0.8880 level. I think there is support down to the 0.8850 level, and then followed by the 0.88 level which is much more supportive. I think that a breakdown below there would be catastrophic for the pair, sending the market down to the 0.86 level, and then eventually the 0.5 handle. Ultimately, I believe that it’s only a matter of time before we turn around that we are starting to see strength in the British pound in general. That’s a bit of a knock-on effect from the GBP/USD pair, although we did have a bit of a pullback during the session on Thursday. When I look at the weekly chart, the EUR/GBP pair has formed a couple of shooting stars in a row, so that of course is negative. However, the 0.88 level has been so important over the longer term, that I think that the market will probably have quite a bit of interest at that level. Ultimately, I think that the market will probably try to support this pair in that general vicinity, so I expect a significant fight. Although we have seen bearish pressure, I believe that we are essentially looking at a market that’s probably going to try to consolidate more than anything else.
If we do break below the 0.88 level, then I think the market starts to pick up speed to the downside. Alternately, I believe that the more likely situation is that we will find a reason to bounce, and that range bound trading strategies are probably what we are looking for. Breaking above the 0.90 level would be extraordinarily bullish, and have me jumping in the market with more money.