EUR/USD
The Euro rallied initially during the day on Tuesday, but found quite a bit of trouble at the 1.1350 level. Because of this, the market looks as if forming a shooting star tells us that the market is ready to drop from here and look for support below. There is a significant amount of support near the 1.1250 level as well though, so this point in time I think that the market simply goes sideways. After all, this is a market that will be very choppy during the late vacation months anyway, so I think short-term pullbacks will be the way to go as far as buying this market is concerned. If we can break above the 1.1350 level, at that point in time I think that we will continue to go higher due to the interest-rate differential.
GBP/USD
The British pound broke higher during the course of the session on Tuesday, but at this point in time I believe that the market still has quite a bit of resistance above and as a result I’m willing to sell resistive candles above. I believe that the 1.35 level above is essentially the “ceiling” in this marketplace, as we continue to consolidate back and forth. We have broken down significantly during the course of the last couple of months due to the vote to leave the European Union, and I believe that the move isn’t done quite yet. If we can break down to fresh, new lows, the market should continue to go even lower than that. The 1.25 level below is my target but I also recognize that during this time of the year, there is a very low amount of volume.
Ultimately, I think the British pound is a currency that will continue to be sold for some time, and as a result I think that the market should continue to sell and sell again.