(MENAFN- Daily Forex)

• I examine EUR/GBP's choppy Monday session, seeing a potential bullish setup forming near the 0.8750 support zone.
• With technical confluence from the 50-day EMA and a softening pound, I'm watching for a bounce to initiate short-term longs.

The Euro initially did gap lower against the British pound, turned around to rally a bit in early Monday trading, but then started falling again. This is a pair that I'm watching with great interest because I do think that a technical setup is about to occur, and therefore, it is definitely worth watching.

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All things being equal, this is a market that has broken out pretty nicely as of late, and it's interesting that we have a situation where the 0.8750 level is coming into the purview of the market. That was a previous resistance barrier and now should be support based on market memory.

EURUSD Chart by TradingView

We have the 50-day EMA race toward that level as well, so there will be yet another technical reason to think that perhaps the buyers are waiting. I don't have any interest in shorting this market, and in fact, probably wouldn't until we break down below the 0.86 level, which is where the 200-day EMA currently resides. Anything below there does get a little bit ugly, but at the end of the day, this is a market that's been bullish for a while of England

It is interesting that the British pound has struggled as the Bank of England decided not to cut rates, though the market had been banking on it. The reality is that the decision by the committee in London was pretty close, so I do think that we're getting closer to that. And I think the market sniffs that out. Whether or not this is a massive trade just waiting to happen is a completely different question, but I do think there's a certain amount of technical interest at 0.8750. And if we get there and bounce, I'm willing to put on a short-term trade to the upside.

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