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- I recognize that this asset is testing the crucial 200-Day EMA, which of course a lot of people will pay close attention to, as it is one of the most widely followed technical indicators out there.
- With this being the case, I think you get a situation where buyers could step back into the market, and we have already seen that during the early hours on Tuesday, they have at least tried to defend that moving averages.
Recent Breakout
The recent breakout was rather brutal, and now it looks as if we are questioning whether or not there is going to be a continuation of the upward pressure. I think given enough time, the EUR/GBP pair almost certainly will see an attempt to go higher, but right now we've got a situation where a lot of people are looking at this through the prism of whether or not we can bounce hard enough to reach toward the 0.86 level again. That's an area that previously had been resistant, so it's not a huge surprise to see that the market has caused a bit in that general vicinity for short-term pullback.
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At this point in time, I look at the 0.85 level underneath as support as well, especially as the 50-Day EMA is starting to race toward that level. It's also worth noting that the 0.84 level previously had been a massive support level on the monthly chart, so it's not a huge surprise to see that we had bounce from there. In general, this is a market that I think continues to be very noisy, but that's not a huge surprise considering that the two economies are so highly interlinked.
On a break above the recent highs of the last week, then I think this is a pair that probably goes looking to the 0.8750 level, but it's also a situation where the market is going to continue to be very noisy and choppy, so with that being said, the market is one that you will have to be very patient with as the moves tend to take quite a bit of time, generally speaking.
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