Euro rallies against Sterling on Monday

The Euro rallied a bit during the trading session on Monday, reaching towards the 0.88 level above. That’s an area that is significant resistance, just as the 0.87 level underneath has been massive support. I think that the market continues to go back and forth, as there are a lot of moving pieces when it comes to the situation between the European Union and the United Kingdom. Beyond that though, we are paid attention to the situation in Italy, and if that comes down, then it should naturally push this market higher. Otherwise, if we continue to see a lot of political uncertainty in that country, that will have money flowing across the English Channel.

I think in the short term, you are probably better off selling closer to the 0.88 level, just as you are probably better buying closer to the 0.87 handle. I would not look for big moves, at least not in the meantime. I believe that the market continues to be a short-term range bound situation, perhaps using the stochastic oscillator or some other type of indicator to give you signals as well. Either way, I think that it is going to be a very tight range that we play and for the next several days, if not weeks. Eventually we will get some type of clarification as to the future direction, but until then keep your position size small and look for small moves at best.