Potential signal:
I am a buyer anywhere near 0.8750 with a stop loss of 0.8695 and a target of 0.8850 above.
I’m bullish on the Euro against the British Pound, as the recent breakout above 0.8750 suggests continued strength. Despite some noise and slow movement, I view pullbacks as buying opportunities while support holds above 0.87.
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The Euro had initially rallied against the British Pound only to show signs of hesitation. Ultimately, this is a market that has recently broken out as it launched above the 0.8750 level. That’s an area that has shown significant resistance multiple times, and it does make a certain amount of sense that it offered support during the previous session.
Ultimately, this is a scenario where I think market memory comes into the picture, and with that, it does continue to elevate the Euro against the Pound. All of that being said, you also have to keep in mind that the British Pound itself is in somewhat dire straits, as the Bank of England is likely to cut rates sometime sooner rather than later, as the economic numbers out of Great Britain have been less than stellar.
I Don’t Like the Euro, However…
This isn’t to say that I like the Euro. I just think I don’t dislike the Euro as much as I dislike the British Pound. I think that’s what a lot of people out there are trying to say. We did see a little bit of a bounce, but in July, we formed this nice trading range that we paid close attention to for several months. But now that we broke out of it, the measured move, the suggested move, is that we go to the 0.89 level eventually.
I don’t really see anything to stop that happening, but I also recognize this is a market that tends to be very noisy and can be slow at times. So, look at these pullbacks as potential buying opportunities, at least until we break down below the 0.87 level. If we break it down below there, then things might get a bit messy, and we may have to try to form some type of consolidation range. Ultimately, this is a market that I am bullish on, but I also recognize that a lot of patience will be necessary.
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