EUR/GBP: Levels, Ranges, Targets

EUR/GBP represents 12 pairs posted in 8 days and all pairs posted performed to the exact expectation as written and the result for each pair was minimum 100 pips. EUR/NZD was a round trip as overbought sent EUR/NZD 100 pips lower to hit mentioned support then a 100 pip bounce higher to upper point.

Trade targets were held 1 to 2 days at most. AUD/USD for example took 2 days to finally achieve 0.7750. The current USD/JPY 104.71 long from Sunday’s opening profited at 106.74 as 105.18, 105.19 and 105.30 broke above today. A vital point exists today at 106.78 so we take easy points and leave struggle areas to the market.

USD/JPY longs from the prior week achieved 106.32 then 106.60 in 1 day on Monday. EUR/USD yesterday went long as mentioned at 1.2360 and bolted past my mentioned 1.2405 but the extra 50 pip gain was positive. GBP/USD struggled at 2 attempts and 15 minutes to break mentioned 1.4196 then achieved 1.4244.

EUR/GBP longer term contains serious problems as 0.8700’s represents 300 pips outside its range. Longer term, EUR/GBP is overbought, its price is miles to high and should trade back to 0.8497 and below. The daily view confirms the longer range perspective. The longer term range problem informs if ever a market implosion strikes the markets then EUR/GBP shorts are first consideration as a deep dive will be seen. EUR/GBP just needs the spark.

Until EUR/GBP trades below 0.8497 then its price will retain the status as far to high and overbought. At 0.8500’s and throughout all 0.8500’s, EUR/GBP volatility will achieve extraordinary status. When, not if, EUR/GBP trades below 0.8497 into 0.8300’s then a comfortable and wider movement trading range will develop from 0.8400’s to 0.8100’s. Why a dead range exists today especially to move higher is EUR/GBP lacks ability to move higher and EUR/USD as well as EUR cross pairs hold EUR/GBP in slow movements and dead ranges.

Why volatility at 0.8500’s is because the 10 year average exists below at 0.8330 and a break represents a wholesale market change and the break won’t come easily.

The current wider EUR/GBP range is located from 0.8760 to 0.8477 and 0.8497. EUR/GBP in the longer view trades miles above and top of its multi year range. Only 2 break points exists above and those are located at 0.8823 and 0.8835. If ever both points break higher then EUR/GBP leaves its multi year range to trade in the outer limits. The similar situation was seen in USD/CAD at 1.3092 and CAD/JPY at 80.44. A lost price is a market gift as was the CAD examples and explains the 200 + pip move in each pair.

What holds EUR/GBP from its impending deep drop is its daily trading range and today located from 0.8876 to 0.8768. At 0.8876 provides reinforcement to assure 0.8823 and 0.8835 won’t break anytime soon. Shorter term over weeks and months, the daily trading range continues to protect 0.8823 and 0.8835 from its break and this situation won’t change anytime soon unless an extraordinary development hits the markets.

The 0.8760’s in days ahead provides first break points then 0.8618 and into volatile 0.8500’s. The trading strategy is obvious as its impossible to trade 1 pip long in EUR/GBP. Until EUR/GBP trades back to its normal reality then shorts only provides the only strategy.

 

Brian Twomey