EUR/USD
The EUR/USD pair showed quite a bit of volatility on Friday as we were approaching the 1.08 support level. I believe that once we break below here, the market is free to go down to the 1.05 handle, and perhaps even lower than that. The Euro is struggling, as seen buying the massive turnaround after the surprise election of Donald Trump on early Wednesday morning in the United States. This is probably one of the most bearish shooting stars that I have ever seen, and as a result it is not surprising to me at all that we continue to go lower. With this in mind, I do think that the bearish pressure continues, and that it’s only a matter of time before we break below the 1.08 handle. Ultimately, I believe that the market will test the 1.05 level and we will have to reassess everything there. In the short-term, I believe that rallies are to be sold at the first signs of weakness.
GBP/USD
The British pound rose initially on Friday but turned around to form a bit of a shooting star. I believe that we are now looking at a market that could turn around. If that’s the case, I believe it is only a matter of time for the sellers start to pile back in as the British pound continues to have quite a bit of problems when it comes to the longer-term outlook. The market is currently testing the 50-day exponential moving average, and quite frankly were in a massive downtrend. Even if we were to break the top of the shooting star, I believe that we will only be able to go about as high as the 1.2850 level where we run into massive amounts of resistance. While I believe most of the serious selling pressure is over, I don’t think that the market is ready to forget all the problems that could potentially be affecting the British pound.
