EUR/GBP Price Forecast January 25, 2018, Technical Analysis

Although the area just above has offered a significant amount of support more than once, it finally got broken down below during the day on Wednesday. This is a negative sign, although I don’t necessarily think we’re going to fall apart, just that the sellers will certainly are in control. This is more of a pro pound move than an anti-euro move from what I can see, as both currencies have gathered steam against the US dollar, but the British pound has outperformed. Ultimately, that should send this market lower, but it may not be an explosive move, but more of a choppy one.

The 0.88 level above should be resistance, so it’s not until we break above there that I feel comfortable buying this pair. In the meantime, at the first signs of exhaustion I suspect that short-term traders will jump in and start selling. The 0.86 level is the next target longer-term, although it will be very messy in the meantime. Because of this, patience will be needed but I think you should get opportunities presenting themselves rather soon.

If we do break above the 0.88 handle, the market is likely to go towards the 0.89 level, which is essentially “fair value” in the market. Beyond there, we could return to the top of the recent consolidation, but now that we have broken to the downside, it’s likely that we won’t be up to do so.

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