Squeeze higher for the cross
The GBP has been on a tear lower this week so far as the Brexit talks are going more aggressive by the day. As a consequence, all GBP pairs are moving and the EURGBP cross here is not an exception.
That being said and considering there are no important economic releases today with the exception of inflation hearings, the EURGBP cross has been bullish for quite some time now and not only from this week.
The chart above shows the beginning of an impulsive move and from my point of view this is a move that should stretch way above the 0.80 level. However, for the expiration dates that we’re interested in, we should take things step by step.
An impulsive move needs an extension and the motive waves to be impulsive as well, but this is not seen on this hourly chart. It means the third wave did not even started and the extension therefore should be from higher levels.
At this very moment, in order for the whole pattern to be confirmed, market needs to go to reach the higher level of the future b-d trend line and this means we should see the 0.80 sooner rather than later.
How to trade
Therefore, call options from the current 0.7820 area with end of day expiration are recommended, and if market is moving aggressively as it should be, put options from anywhere between 0.7950-0.80 with the same expiration date should be traded.