EUR/GBP Price Forecast January 23, 2018, Technical Analysis

The EUR/GBP pair has rolled over a bit during the trading session on Monday, reaching below the 0.88 handle. This area has been massively supportive, extending down to the 0.8750 level. This will be interesting to pay attention to, because if we can break below the 0.87 level, the market will more than likely go much lower. Ultimately, this is a market that I think continues to bounce around in the larger consolidation area, but we may have a bit of negativity in the short term. Obviously, it will make a lot of noise due to headlines, as we are continuing the conversation between the European Union and the United Kingdom.

Because of the longer-term consolidation, I am looking for some type of buying opportunity, but I would be patient. I would like to see a pullback, a bounce, and then the recovery above the 0.88 level before buying again. If we did breakdown, I suspect that we will be going down to the 0.86 level initially, and then possibly even the 0.85 level underneath. I think the only thing you can count on at this point is volatility, as there are so many moving pieces. Remember, this pair tends to get choppy in general, so my thesis goes right along with the overall historical attitude of the pair. Once we do rally, I suspect that the 0.89 level would be targeted first, as it is “fair value”, and then eventually the top of the range which is closer to the 0.90 level.