EUR/GBP Technical Analysis – January 19 2015

The EUR/GBP pair fell hard during the course of the session on Friday again, as we have clearly busted through major support in the form of the 0.7750 level. With that being said, the next round number should be the target: the 0.75 handle. Keep in mind, that this is simply a measure of which currency is stronger, and of course as the British pound has at least somewhat held its own against the US dollar, it is certainly stronger than the Euro which is testing the 1.15 level against the USD. In other words, it’s “less bad.”

That being said, I believe that when this market bounces, it should offer selling opportunities for short-term traders and remember that this pair does tend to grind more than anything else. The two economies are so intertwined that typically the currencies don’t move quickly against each other but one of the saving graces of this particular currency pair is the fact that the PIP value is higher. You only need it to move a bit to make decent money.

I believe that the 0.7750 level will now offer significant resistance, so bounces in the downtrend can be sold again and again on signs of resistance as we should continue to head lower. Quite frankly, nobody seems to know where the bottom is in the Euro, but certainly the sellers are in control and you cannot go against of this type of selling market wide. There might be a time to buy the Euro going forward, but it most certainly is in anytime soon, based upon the EUR/GBP pair, and most certainly based upon the EUR/USD pair as well.

Ultimately, we should head to the 0.75 handle over the course of the next couple of weeks, where we will again have to make a significant decision as to whether or not the Euro is going to continue to sell off. If we see any bullishness whatsoever in the GBP/USD pair, that will most certainly continue to put pressure on this pair as the pound shows that it at least isn’t the Euro.