EUR/USD
The EUR/USD pair went back and forth during the course of the day on Wednesday, as we simply cannot make heads nor tails of what the market wants to do. With this, I believe that we will continue to see extraordinarily volatile actions, with a very little in the way of results. I believe that we are drifting lower over the longer term, but I also recognize that it is going to be very difficult to hang onto a trade. Because of this, I suspect that the best way to play this market is probably something akin to selling short-term rallies that show signs of exhaustion, but only for short-term moves. Ultimately, I believe that we do reach down to the 1.1150 level over the next couple of weeks. I really think this market is probably best left alone though.
GBP/USD
The British pound initially fell on Wednesday but turned around to find enough support to form a little bit of a hammer. This hammer of course is a very bullish sign, but ultimately I think there’s far too much in the way of negativity when it comes to the British pound, especially after the vote to leave the European Union. I do recognize a short-term buying opportunity could present itself, but more than likely we will see sellers at the first signs of trouble. With this being the case, I prefer to sell exhaustive candles as they present themselves, and I find it very difficult to imagine that the market is going to break above the 1.35 level over the longer term. I believe that the British pound will continue to be very soft, but we are past the massive and impulsive selling. I think short-term rallies offer short-term selling opportunities, and then eventually we should break down below the 1.2850 level, extending the move down to the 1.25 handle.
