EUR/GBP forecast for the week of December 18, 2017, Technical Analysis
The EUR/GBP pair rallied a bit during the week, as we continue choppy conditions, in a well-defined consolidation area. This is not a big surprise considering that we are still negotiating the divorce of the UK from the United Kingdom, so expect noisy conditions. However, it appears that we have certainly found plenty of reason to stay within a well-defined range, and that is excellent trading conditions just waiting to happen for traders. At this point, I believe that the market will go looking towards the 0.90 level above, where it will probably run into trouble there again.
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With this in mind, I believe that buying on a break above the top of the candle for the week should be a nice opportunity for those willing to play the range. If we can break above the 0.90 level, everything changes, and we should then go looking for the previous highs at the 0.93 region. Alternately, if we were to break down below the hammer from the previous week, that would be very negative sign and send this market looking towards the 0.83 level below, which is massively supportive. Overall, I think we are in a bit of a “holding pattern”, as we are awaiting the final details of the break away from the European Union, but I think stability in the EU will probably be preferred over a lot of questions and the United Kingdom going forward. Because of this, I remain bullish long term, but recognize that anything can come from the discussions.