Euro falls against British pound, but recovers to form a hammer

The Euro fell against the British pound during most of the week, but as you can see we did of forming a hammer which is a bullish sign. This doesn’t make be bullish of the market, it just tells me that we are ready to see more of the same. In the short term outlook is that we consolidate between the 0.88 level at the top, and the 0.87 level at the bottom. If we can break above the 0.88 handle, then perhaps we could rally as far as the 0.90 level, but that seems to be very unlikely at this point.

If we break down below the bottom of the hammer, the market could very well go down to the 0.86 level. The 0.86 level underneath is massive support, and I think if we can break down below there it’s likely that the market will unwind down to the 0.83 level after that. Otherwise, I think we continue more of the same and it makes sense considering that we are still worried about the negotiations between the United Kingdom and the European Union continue, and I think that there are also concerns in the European Union with Italy. Beyond that, the Bank of England looks likely to raise interest rates sometime in the next year, and that will continue to keep this market a huge mess. I would expect more of the same over the next several weeks, meaning that short-term traders are probably going to be better off in this market the longer-term ones.