EUR/GBP rallies, then pulls back on Wednesday

The EUR/GBP pair has a significant amount of support underneath at the 0.87 level, and it looks as if we will continue to find that area important. I think that every time this market rallies, it should try to make a fresh, new high, but it will remain choppy as we continue to listen for headlines coming out of the negotiations and rhetoric between Brussels and London. I believe that the 0.87 level is crucial, as it is the bottom of the larger consolidation area. A breakdown below that level could send this market down to the 0.86 handle, which is even more supportive on longer-term charts. I think at this point, the market is likely to find buyers on these dips as they offer value, and I anticipate that by the time I write my analysis for this pair 24 hours now, we will be higher. At the very least, I would anticipate a bit of stabilization above the large figure.

The next target would be the 0.8750 level, followed by the 0.88 handle above, which has been important more than once. Looking at the longer-term charts, we have consolidation between the 0.87 level on the bottom, and the 0.90 level on the top. I don’t see anything that is going to change that in the short term, although things could obviously change rather rapidly, so because of this you will need to be very diligent about your stop loss and position size when trading this pair has it will be one of the more volatile the summer.