The dear old EUR/GBP continues to struggle at the 0.8600 level, testing and retesting on an increasingly regular basis before pulling back to continue this extended phase of price congestion. Today looks like becoming yet another failed attempt to break higher, with the intra day high, touching the 0.8590 price point, before retreating later in the session. This price is identical to that of last week, characterized with the tweezer top candle pattern which duly delivered a pullback on the daily chart.
Should today’s candle end as a shooting star, which seems increasingly likely, then intra day scalping traders on this pair will be looking to short the market once again on Monday morning. The floor for the current price congestion remains firmly established in the 0.8425 area, and provided this holds, then we are likely to see the pair continue in this 200 pip range in the short term. It is interesting to note that today’s weak move higher was as expected, given the volume associated with yesterday’s wide spread up candle which only saw moderate volumes, and a clear signal of impending weakness, duly validated today. The key now is patience as we look set for ‘more of the same’ in the short term. Longer term a breakout beyond the 0.8600 region will then open the way for a test of the 0.8800 area in due course.
By Anna Coulling