EUR/GBP A Sell At 0.8900?

Brexit Chaos

Some financial experts have recently claimed that the GBP pairs have become untradable just recently as a result of the ongoing chaos surrounding the Brexit negotiations, and it is hard to disagree with this.

That’s because there is so much uncertainty surrounding the Brexit deal, and so many questions still to be answered:

• will Theresa May survive a plot to oust her from within her own government?
• if she survives, does she have enough support to get the agreement through?
• will the Brexit deal be delayed or changed if there is a change in leader?
• will there be a catastrophic no-deal Brexit?
• could there even be a second referendum?

It seems that every day that are several stories that only add to the confusion and chaos, and all of these events have a major effect on the GBP pairs.

However at the time of writing, it would appear that Theresa May’s position is looking a little stronger, and there is a greater likelihood that her Brexit deal will go through, although there are no still no guarantees of anything of course.

Time To Sell EUR/GBP?

The Euro rallied hard against the pound last week for obvious reasons, moving from 0.8656 to a high of 0.8908, but it is clear from looking at the price chart that the price has reached the upper trendline that has recently been established:

Subsequently, this trendline may well act as a strong resistance level in the coming days and weeks, even amidst all of the ongoing chaos surrounding Brexit.

Potential Trading Opportunity

The longer term downward trendline currently sits just above the 0.8900 level, which is interestingly a nice round number. So this is another reason why this pair may be sold off at this key level.

Therefore if you were thinking of trading this EUR/GBP pair, it might be worth looking for a strong reversal signal around this 0.8900 level, such as a pin bar or a divergence pattern on the MACD, RSI and stochastics indicators.

You could also move down to the 4-hour chart and look for the same reversal signals on this lower time frame to get you into a trade earlier.

Anyway these are just my own thoughts and opinions on the future direction of this pair. At this moment in time, I would say that a reversal is looking more likely, particularly with Theresa May’s position strengthening, but please note that I am not offering any trading or financial advice. This would still be a risky trade because this and other GBP pairs are still vulnerable to any major Brexit developments.