Euro continues to drift lower against the British pound

The EUR/GBP pair bounce slightly during the day on Thursday, but we are already starting to roll over a bit and show signs of negativity again. Over the last several weeks, every time this market rallies, we only turn around again. I think that we are now going to go looking towards the 0.87 level again, and then eventually break down to the 0.86 level which has been support on longer-term charts. This is a massive level, so I think it’s good to be very difficult to break down below there. It’s not that we can’t, just that it will take several times.

Ultimately, if we rally from here I think that the market will struggle to break above the 0.8825 handle, which is the recent resistance that we had seen during the last couple of weeks. This is a market that is very noisy, and I think that the noise will more than likely continue. I think it favor short-term trading, so scalpers will love this market. Rallies that show signs of exhaustion are to be sold, especially if you can use something along the lines of the stochastic oscillator on the short-term chart. Ultimately, if we did break down below the 0.86 level, the market will unwind rather drastically. I think that rallies have to be looked at with suspicion, and therefore I think that being patient enough to pick up the British pound “on the cheap” is the way to go.