EUR/USD
The EUR/USD pair did rally during the course of the day on Tuesday, filling the gap that had formed at the beginning of the week. However, we did get back some of the gains and it looks as if the sellers are still very much in control overall. I recognize that the 1.10 level does cause a little bit of psychological support, but at the end of the day it does look like we will probably grind our way lower.
Beyond that, I can make an argument for a trend line been broken last Friday, which of course would make sense as the United Kingdom voted to leave the European Union. This of course is very negative for both economies in the short-term, and it leaves real questions asked to the viability of the European Union overall. With that, I am only selling the Euro at the moment but do recognize that there will be a lot of volatility going forward.
GBP/USD
The British pound has really taken it on the chin over the last couple of days, but that would have been expected. The question then becomes where do we find the bottom? I don’t think were near it yet, and I think that the rally on Tuesday shows just how much negativity there is going to be in this market. After all, you have the US dollar on the other side of the equation, which is typically the go to safety currency for traders. Because of this, I believe that this market will continue to fall, offering a fairly strong downtrend. I at the moment am aiming for the 1.30 level, but recognize that we could be looking at even lower levels given enough time.
At this point, I will continue to sell exhaustion as I see it, as I think the market will certainly try to rally from time to time, but will struggle to hang onto any gains in my estimation.
