Euro falls against Sterling only to turn around for the week

The EUR/GBP pair has initially fallen a bit during the week but turned around to form a hammer. By breaking above the top of the hammer we could send this market towards the 0.90 level above, which has been resistance in the past. Alternately, if we break down below the bottom of the hammer I think we will then go down to the 0.86 level. Remember, this market continues to be very noisy as we have negotiations between the European Union and the United Kingdom continuing, and that of course will cause a lot of headlines to come back into the market.

I think the 0.86 level should hold, but if that were to break down rather rapidly, we would probably go down to the 0.83 handle below there. I think that we are more likely to continue to go higher though, and I believe that a break above the top of the candle for the week should send short-term buyers into the market. I believe that longer-term trading is probably going to be a bit difficult, but we can use this chart to give us an idea as to which direction to be trading. Ultimately, this is a market that will continue to trade in the overall consolidation area, which isn’t exactly the best thing for longer-term traders. However, pay attention to the stochastic oscillator, as it gives us an idea as to buy and sell at extremes when it comes to this pair.