When you look at the totality of the previous 3 sessions, I think we are essentially looking at a fractal that should send this market to the upside. A break above the 0.8850 level sends the market looking towards the top of the longer-term consolidation area, which is the 0.90 level above. If we can break above there, then it’s very likely that we will continue towards the 0.93 level which was the highs previously. The market continues to be very noisy, as there are a lot of headlines that will push us pair round as we are trying to figure out the world after a UK exit from the European Union.
I think that eventually this pair does break out to the upside, because traders prefer certainty, which you will get more of in the European Union, as compared to the United Kingdom. I think that this market will be more of a “buy on the dips” attitude, and that given enough time we will not only reach the highs, but perhaps even parity. While I do think that the death of the United Kingdom being announced was a bit premature, I think that there are a lot of concerns as to how things play out. The trend is certainly to the upside, so that’s reason enough to look at pullbacks as value. If we were to break down below the lows of the Friday session, then I think the market probably drops down to the 0.86 level after that.
EUR/GBP Video 12.12.17
This article was originally posted on FX Empire