During the day on Thursday, the Euro initially trying to rally against the Pound, but found the 0.90 level to be far too resistive. With this being the case, the market looks very much like one that is running out of steam, and we ended up forming a hammer. The hammer of course is a very negative sign overall, so I think we are going to pull back. However, that does not mean that we at The Trader Guy are willing to put money to work in shorting this pair. After all, the British pound has been suffering for some time, and that won’t turn around overnight.
Looking at the charts, you can see that there is an uptrend line that has been holding for some time, so it looks as if the 0.88 level will be pretty supportive, so having said that I think that if we do pullback to that level we will get either a supportive candle or a bounce. Even if we break down below there, I think that the 0.87 level below is even more supportive, and as a result I am a buyer under any circumstance.
If we do break above the top of the shooting star, it’s very likely that that will just increase the buying pressure as well. I think given enough time, we will go to the 0.92 level again, and then possibly the 0.95 level after that. I have no real interest in selling this pair at the moment, at least not until we break down below the 0.87 level on at least a daily close, and probably on a relatively impulsive candle at the very least.
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