EUR/GBP Forecast: Euro Continues to Press Resistance Against Pound

• The euro has gone back and forth during the course of the trading session on Monday, as the British pound is struggling to break out.
• Ultimately, the parent looks as if it is going to continue to bounce around between the 50-Day EMA in the 200-Day EMA indicators, which of course has a major influence on technical trading.
• I would also point out that Friday was a shooting star, and that does suggest that perhaps we are running into a bit of exhaustion.

If we were to turn around and breakdown below the 50-Day EMA, then the market is likely to go down to the 0.85 level. The 0.85 level is an area that I think a lot of people will be paying close attention to as it is a large, round, psychologically significant figure, and an area that has already formed a bit of a short-term “double bottom”. If we were to break down below there, it would be an extraordinarily negative turn of events, as the market has defended this area not only recently, but in the past as well.

Euro and Pound Choppiness

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This is a pair that is very choppy to say the least, and therefore it’s likely the market is going to continue to see a lot of noisy behavior. All things being equal, the two economies are highly interlaced and interlocked, so that being said I think it’s a situation where this pair will continue to be very noisy. However, if we can break above the 200-Day EMA which is just above the top of the shooting star from Friday, then we could really start to take off toward the 0.87 level. Underneath, if we were to break down below the 50-Day EMA, then the market probably drops down to the 0.85 level.

If the market were to break down below the 0.85 level, then I will get aggressive to the short-term, perhaps building a massive amount of position sizing to take advantage of what would be a major breach of support. Either way, I think you need to be cautious about the leverage initially, but once we do make a bigger move, this pair could grind for quite some time in either direction.

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