EUR/GBP Forecast November 2, 2017, Technical Analysis

The EUR/GBP pair drifted lower during the day on Wednesday, but did see a bit of volatility to the upside later in the day. It looks as if the market is ready to test the 0.88 handle, which is an area that should be resistive. After all, it was significant structural support for quite a while, and now I think it’s very important to watch the market in this area as it could give us a signal as to where to go next. I think at this point I would expect exhaustion, as we have seen a significant break down, but I also recognize that we could break higher, and if we do clear the 0.8825 handle, at that point I think it would prove itself to be supportive again. Overall, I think that there’s a lot of questions when it comes to this pair, mainly because of the recent decision for the United Kingdom to leave the European Union. That has this market looking at a lot of various headlines, and therefore a bit of a headache for traders.
If we rally, I think the market probably reaches back towards the 0.90 level above, which is the top of the recent consolidation area. However, I also recognize that a breakdown and falling from the 0.88 level could send this market down to the 0.86 handle. Either way, this is a market that is going to be very volatile, as it typically is anyway. The market continues to be one that you should be able to play, but you should play with small positions and then add when things go in your favor. That’s probably the only way you’re going to be able to tolerate the noise. Ultimately, this is a noisy market that could favor short-term trading.