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EUR/GBP Price Forecast January 2, 2018, Technical Analysis

The EUR/GBP pair was very choppy during the trading session on Friday, reaching towards the 0.89 level, but failing to break out shows that we are not quite ready to take off yet. · FX Empire
Christopher Lewis
Updated

The EUR/GBP pair initially fell during the trading session on Friday, but found enough strength to rally as both currencies rallied against the US dollar. If we can break above the 0.89 level, the market could go to the top of the recent consolidation area, reaching towards the 0.90 level. That’s an area that should be resistance, but I think if we can break above there, the market is ready to go to the longer-term highs at the 0.93 level from earlier this past year. I think that is what will happen, but there are a lot of headlines out there just waiting to push the market in both directions. As the United Kingdom and the European Union negotiate the split, there will be headlines that can influence where the trade goes.

I think that the 0.88 level underneath is the massive “floor” in the market, so I’m willing to buy dips, but I also recognize that you need to be very patient and let the trade work itself out. Once we break the 0.90 level, I’m willing to add to my core position and become a bit more aggressive as it would be a serious break of resistance. Alternately, a breakdown below the 0.88 level is negative and should send this market down to the 0.86 handle, followed by the 0.8350 level. However, that’s the least likely of scenarios, and I believe that traders will continue to favor the Euro due to the unknown effects on the British economy that the split will cause. This is a necessarily bullish for the European Union, it’s just that it’s bullish for stability.

EUR/GBP Video 02.01.18

This article was originally posted on FX Empire

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