EUR/GBP continues to find support at crucial level during Tuesday trading

The EUR/GBP pair initially pulled back during trading on Tuesday but found enough support near the 0.7 level to cause a bit of a bounce. In fact, it looks as if we will probably continue the overall consolidation area, which has been very crucial. I think that the market breaking above the 0.8730 level could send this pair to the 0.8750 level. The alternate scenario of course is a breakdown below the lows, but that seems to be very unlikely, least in the short term. However, we have a lot of headline noise coming out of the negotiations between the European Union and the United Kingdom. There will continue to be a lot of concern as to what those negotiations will bring, so obviously the occasional headline will move this market quite drastically.

The 0.88 level would be the next target on a break out to the upside, but either way, this market is going to be very choppy and noisy. I would only start with a small position, and then add once the market has proven itself, you can add to your position at that point. I believe that the market should ultimately rally, but it’s not until we get a bit of momentum that I’m willing to put a lot of faith into the market, as it’s easy to get whipsawed in this type of environment. Pay attention to the EUR/USD and the GBP/USD for relative strength though, as it is a great way to figure out which way to be trading this market.