The EUR/GBP pair gapped lower at the open on Monday, breaking down to the 0.8770 level. We bounce from there, reaching the 0.88 level later in the day. If we can break above the top of the range for the day, the market should then go to the 0.8850 level. I believe that this pair will continue the longer-term uptrend, and if we can break above the highs for the session on Monday, the market could go another 30 pips rather rapidly. I have a longer-term target of 0.90 above, but obviously it’s going to be very choppy as this is the epicenter of currency traders for the whole discussion between the United Kingdom and the European Union.
Support
We are in a longer-term uptrend, so I believe there will be support from time to time, and therefore I have no interest in shorting this market. We would need to see some type of negative weekly candle to start selling, as the market has been so bullish over the longer term. I still believe that ultimately the upside will be favored as it appears that the European Union is in a much stronger position than the United Kingdom.
Buying dips is probably the best way to go, making short-term moves to offer value. I believe that taking a small position and then adding to it when you find yourself in a positive position. Ultimately, I believe that this will be a couple of nasty months ahead of us.
This article was originally posted on FX Empire