The GBP/USD pair initially fell during the course of the session on Monday, testing the 1.50 level. The 1.50 level is of course a large, round, psychologically significant number, and ultimately it is only a matter of time before people get involved when you get near there. After all, the market loves large numbers, and 1.50 is about as psychologically significant as it gets. Any rally at this point in time will more than likely try to reach towards the higher levels, somewhere near the 1.52 level. After all, that is an area that has been supportive and resistive recently, and you also have to keep in mind that the most recent rallies continue to find lower highs.
Selling Rallies
I continue to sell rallies going forward on signs of exhaustion, as the market will continue to show downward pressure. After all, the trend is very strong to the downside, and I believe that will continue to be the way going forward as the US dollar is highly favored. Because of this, I have no interest whatsoever in selling this market as I do not want to go against the value of the US dollar going higher.
Given enough time, I feel that we break down below the 1.50 level, and much below there. I believe that we will eventually go down to the 1.45 level given enough time, and that although I have a negative attitude when it comes to this market, the reality is that the market will probably be choppy as the “easy money” has already been had shorting the British pound.
This market should do better than the Euro against the US dollar, as although the British pound is soft, it’s not the Euro and that of course is going to make this market a little less negative than the EUR/USD. I have no interest in buying until we get above the 1.5350 level at the very least.
