When price hits resistance and reverses, lots of voices call it a top. The .8700 level is where the pair has been stopped in March of 2013 and again in July of 2013. Price swooned south and had been rebounding since. Price is again at the .8700 level. Calling this a top might be a mistake since the pair has been much higher. The 2008 top was .9800! What's important to understand here is the fundamental reasons promote the idea price will move higher in my opinion. The ECB can no longer push the Euro lower through policy. They have exhausted what monetary policy can do. The British economy is soft and getting softer. Tomorrow's retail numbers will likely reflect a nervous British consumer. The uncertainty created by Brexit is forcing businesses to begin to divest of Great Britain if only as a hedge against the unpredictable impact. The result is a stronger Euro and a weaker Pound.
Current situation:
- On the weekly and the 3-day chart, the pair is in an uptrend. The week starting July 11th was negative in EUR/GBP, but four out the next five weeks were rallies. The uptrend is well intact, and the July high has been taken out.
- On the daily chart the pair printed a red candle that caused bulls to pause and bears to rejoice but since then the price has not moved. After rallying last week it's plausible that the pair is taking a breather before the next advance.
Looking ahead:
- British retail sales released on Thursday, and I believe they will be taken negatively by the market.
- Next week's British GDP second estimate will probably revise the initial estimate lower pressuring the Pound
- Next week's German IFO Business Climate report is likely to be positive. Since the February low business conditions have been improving according to this report.
Notes:
- .9300 is a likely target if .8700 breaks.
Current situation:
- On the weekly and the 3-day chart, the pair is in an uptrend. The week starting July 11th was negative in EUR/GBP, but four out the next five weeks were rallies. The uptrend is well intact, and the July high has been taken out.
- On the daily chart the pair printed a red candle that caused bulls to pause and bears to rejoice but since then the price has not moved. After rallying last week it's plausible that the pair is taking a breather before the next advance.
Looking ahead:
- British retail sales released on Thursday, and I believe they will be taken negatively by the market.
- Next week's British GDP second estimate will probably revise the initial estimate lower pressuring the Pound
- Next week's German IFO Business Climate report is likely to be positive. Since the February low business conditions have been improving according to this report.
Notes:
- .9300 is a likely target if .8700 breaks.