• The euro has rallied a bit against the British pound as we continue to see the 0.85 level offer support.
• This is an area that goes back quite some time as far as market memory is concerned, and therefore I have been buying this pair in little bits and pieces.
• This is a pair that is very choppy, so you don’t want to go “all in” right away regardless. The only thing you can think about is taking quick profits.

Whether or not this support holds remains to be seen, but we have gotten through the ECB and its rate cut and have held firm. That's a generally good sign. So, it'll be interesting to see how this plays out. Above us, we have the 50 day EMA, which is close to the 0.85.50 level. And if we can break above there, then the market could go looking to the 0.86 level.
 

The Latest Swing Low Is Crucial

If we were to break down below the latest swing low somewhere near 0.8480, then I think the pair finds itself in significant trouble, probably aiming for the 0.84 level before it is all said and done. I do expect a lot of noise and volatility, so really choppy behavior is what I am looking at as a very real possibility.

Ultimately, this is a market that you will have to be somewhat cautious with, but I think it definitely favors the upside in the short term. Whether or not we can get a sustained move to the upside remains to be seen. But right now, it certainly looks like buyers are willing to step in and defend this crucial 0.85 level.

(Click on image to enlarge)

As long as that’s the case, then it does make sense to have short-term long positions in this market, as it has been fairly reliable around the 0.85 level. Whether or not that changes anytime soon remains to be seen but we will have to wait and see.

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