EUR/GBP forecast for the week of July 17, 2017, Technical Analysis
The EUR/GBP pair initially rally during the week, and look as if it was ready to break out. However, we turned around to form a shooting star and it now looks as if the market is trying to break down and perhaps continue the overall consolidation that we have seen for the entirety of the year. A breakdown below the 0.8725 level should send this market down towards the bottom of the consolidation area again. That could be a longer-term move, and therefore give us an opportunity to short and hang on to the move. After all, the British pound broke out to the upside against the US dollar on Friday, clearing a significant amount of resistance. Ultimately, this should translate into this market as well.
Negotiations
I believe that the negotiations between London and Brussels will continue to be a main factor in this market, so pay attention to headlines coming out of the negotiations, and this can cause quite a bit of volatility and potential trouble. Because of this, I believe that you will have to keep your position size somewhat small, as a sudden headline crossing the wires could turn the market completely against you. However, once the trade goes in your favor, we could add to those positions, but until then it’s probably best to be very cautious. If we break above the top of the shooting star, that would be a very bullish sign, and it should send this market looking for the 0.92 level above.
This article was originally posted on FX Empire