EUR/USD
The EUR/USD pair went back and forth on Monday, but the most important thing that I saw was the 50-day exponential moving average acting as resistance for the session. The same thing happened on Friday, so I find it interesting that we repeated that pattern on Monday. If we can break down below the bottom of the candle for Monday, I think that the market will reach to the 1.05 handle. Alternately, I believe that the 1.07 level above is massively resistive, and of course should continue to bring in sellers. Either way, I don’t like the idea of buying, so I’m waiting for sell signals in general.
GBP/USD
The British pound gap lower at the open on Monday, testing the 1.20 level underneath. By doing so, the market looks as if it is trying to break down below there but we did bounce. I think the gap will get filled, and then the sellers will return to the marketplace as per usual. A breakdown below the 1.20 level census market looking at much lower levels, perhaps even the 1.15 level underneath there. That’s an area that’s massively supportive on monthly time frames, which of course means something to most traders. Even though the British pound is falling apart, I would anticipate that a move down to the 1.15 level will be messy, and it certainly will find a lot of buying pressure.
I have no interest in buying, I believe that the 1.2250 level is also resistive, so having said that any exhaustive candle between here and there gives me an opportunity to take advantage of value in the US dollar. The British pound gap lower and most Forex pairs at the open on Monday, so I think the British pound will continue to be very negative.
