By FXEmpire.com
The EUR/GBP pair absolutely exploded towards the end of the week as the market bounce hard. It should be noted however, that this market is definitely in a downtrend, and the fact that we could make a case for a little bit of a down trending channel. The bounce that we have seen over the last two weeks is simply an extension of the bottom part of that channel and could simply lead us for a bounce towards the 0.80 level.
We believe that the 0.80 level could be very resistive going forward, and would look for weak action at that general vicinity in order to sell this pair again. Granted, the British economy isn’t firing on all cylinders, but it certainly doesn’t have the problems that the European Union has presently. With this being said, it does look like we are going to get an opportunity to sell this pair from higher prices again.
As long as the problem continues in the European Union, and let’s face it – nothing’s changed drastically, we see no real reason to buy into the Euro hype. The politicians in Europe have done a stellar job of disappointing the market so far, and it’s hard to think that that will change anytime soon. Even if they do help out, and do all of the things that they can to support the survival of the Euro, it will be of the quantitative easing variety and that should lower the value of the currency overall anyways.
It isn’t in till we get above the 0.8150 level that buying the pair can be considered a viable option. If we can get above that on a daily close that we could perhaps be seen a massive momentum swing. Until that happens however, is going to be much easier to sell this pair on the rallies as it has been since May of last year.
With the trend being this strong, there’s no reason to fight it and we certainly wouldn’t advise doing so. In this current environment, when we see a bounce like this we simply start looking for where we can sell at higher prices.
Click here to read EUR/GBP Technical Analysis.
Originally posted here
