- The euro shot higher in the early hours against the British pound on Monday, but just as we had seen on Friday, it looks like there is still a lot of selling pressure.
- This could be due to the fact that the euro is having to come to terms with the ECB cutting rates in Europe.
- That being said, we are at a major support level that a lot of people will be paying close attention to from a longer term standpoint, and therefore this to me is still a market that you could be a buyer of.
At least it has the area underneath that has held up in the form of the 0.85 level multiple times. Whether or not it actually holds up longer term, we'll have to wait and see, but right now this is an area where you would expect a bit of a bounce sooner or later.
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Breakdown? Then What?
That being said, if we were to break down below the 0.84 level, then the bottom could fall out in this EUR/GBP pair, and we could see the British pound spike against the euro. Typically speaking, this is a very choppy and noisy market that doesn't have anywhere to be most of the time. And if that's going to be the case, you have to be very patient.
This is not a market that I think you are going to get huge moves all of the sudden. And I do think that the 50 day EMA just above continues to offer a bit of resistance as well. If we can break that, then we can go look to the 200 day EMA, which of course is an indicator that a lot of people pay attention to. And it just so happens to look like it's right at the 0.86 level, an area that in and of itself would probably cause a certain amount of interest. Ultimately, this is just a reversion to the mean type of setup from what I see, as we had been in that massive consolidation area for so long.
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