By FX Empire.com
The EUR/GBP pair fell during the session on Friday as traders ran from the Euro in general. It should be noted that both of these currencies were weak against many other ones, so this really was a contest between two very weak currencies in general. The Pound won, but not exactly in a convincing manner.
However, it would be noted that the 0.84 level is a resistance area, and it is from there which we fell. The pair looks set to continue the recent consolidation between the 0.84 and 0.82 levels that have contained the market over the last several weeks. The pair could be sold on a shorter time frame as the Euro zone continues to struggle with the Greek debt issue – or more to the point, the lack of deals.
The pair is more of a day trading environment as the pair tends to move fairly slowly most of the time. The recent action has produced very obvious levels, and because of this we will look for weakness and short it for a quick trade in the order of 50 pips or so. The market will continue to possibly be moved by headlines, so sudden moves are possible, but as both of these currencies are weak – the moves will be dampened somewhat in comparison to other pairs that have one of these currencies in it.
The selling of this pair can be done once the lows on Friday are broken, and even if the 0.84 level is broken to the upside, we aren’t especially keen on buying as the market has a lot of resistance built at the 0.85 level, and this would be countertrend to the overall move we have seen recently. In this situation, we find we are much more likely to take profits in short order, and don’t necessarily look for a move that will let us “let the trade run”, and simply offer short and small gains over and over. We prefer selling in general, as the headline risks seem to be negative overall, and as such we will sell every time we rally.
EUR/GBP Forecast February 13, 2012, Technical Analysis
Originally posted here
