• The EUR/GBP initially tried to rally during the trading session on Thursday but has run into a bit of a resistance barrier near the 0.88 level.
• Ultimately, this is a market that’s been grinding back and forth for a while, so I anticipate that the fact that we are forming a bit of a shooting star should probably not be much of a surprise.
• Unless something changes quite drastically, I anticipate that this market will continue to see a lot of back-and-forth behavior.

This does make a certain amount of sense, as the 2 economies are so intertwined, even though the British left the EU. They are still massive trading partners, so this pair behaves a bit like USD/CAD, or AUD/NZD, as it is used a lot for commercial purposes as well as your typical trading or speculative purposes. I do believe this point we have a situation where the market is going to continue to be very noisy, and of course, ask a lot of questions of traders in general. If we break down below the bottom of the candlestick for the trading session on Thursday, then we could see my thesis play itself out, and we could drop down to the 50-Day EMA, perhaps even down to the 0.66 level, which is right around the 200-Day EMA.
 

This Pair is Worth Watching

If we break above the top of the 0.8850 level, then it’s likely that we could go to the 0.89 level, maybe even the 0.90 level. We would need to see the Euro pick up quite a bit of strength against most currencies, not just the British pound. For what it is worth, it looks like the Euro is struggling against the US dollar, which is probably the easiest way to gauge whether it has any strength or not. In fact, it looks like we are a bit tired, so I pullback would make a certain amount of sense as it could offer value given enough time.

 Whether or not we break down significantly is a completely different question, but I think a little bit of a return to the range makes quite a bit of sense considering that we are heading into the holidays and a serious lack of liquidity. This is a pair that will be worth watching because it has such a clearly defined range.

(Click on image to enlarge)

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