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EUR/GBP Price forecast for the week of February 5, 2018, Technical Analysis

Christopher Lewis
Updated
The EUR/GBP pair initially fell during the week, but as you can see, we have turned around to form a nice-looking hammer at a vital level.

The EUR/GBP pair fell significantly during the week but turned around to form a hammer. That’s a very bullish sign, and I think that we could rally from here and go looking towards the 0.89 level, perhaps even the 0.90 level after that. Ultimately, this market should continue the overall grind sideways, with an opportunity to go higher being based upon some type of resolution between the United Kingdom and the European Union, so I believe that this is more of a short-term back and forth type of situation than anything else. Longer-term, I believe that we will eventually go higher, but I think that we just don’t have the necessary momentum.

We had formed to hammers in a row, and that’s about as bullish as it can get. However, we just don’t have the necessary momentum. If we can break above the 0.90 level, then the market goes looking towards the 0.93 level. I do believe that eventually that happens, but we need to see some type of resolution first before traders are willing to jump in and put serious money to work. One thing that could help as if the EUR/USD pair breaks significantly above the 1.25 handle, as it could send the EUR higher in general. I don’t like the idea of shorting this market, at least not until we would break down below the 0.86 handle underneath, which would send this market down towards the 0.83 level again. I think you can expect volatility, and quite frankly it’s probably easier to trade this market from a shorter-term time frames.

EUR/GBP Video 05.02.18

This article was originally posted on FX Empire

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