The GBP/USD pair broke down during the course of the session on Tuesday, slamming into the 1.48 level. With that, it appears that the market is going to continue to drive lower, as we continue to consolidate in general. Remember, we are most certainly in a massive downtrend, so I believe that selling is the only thing you can do. The 1.48 level is of course a barrier for the sellers, but I think that the 1.4750 level below is the bottom of support, and if we can get below there I think that we should continue to drive much lower.
I do recognize that there is the potential for a bounce, but I believe that will simply be temporary support. I think that the US dollar continues to be the favored currency around the world, so it’s very difficult to imagine that the British pound is going to suddenly take off to the upside against it. It’s not even then I think that the British pound is going to be soft, it’s just that the US dollar should continue to be that strong.
FOMC minutes
Remember, today is the FOMC Meeting Minutes release, so that of course could bring volatility into the Forex world. I believe that the market rallying would simply be an opportunity to start selling again. I think that any knee-jerk reaction could bring a bit of a dichotomy into the marketplace that you can take advantage of. I also believe that this market is going to head down to the 1.45 level eventually, but we do need to break down below the aforementioned 1.4750 handle. It is not until we get above the 1.52 level that I would even consider buying this pair, and at that point in time I would suspect that the market would head to the 1.55 handle. However, it’s very unlikely to be seen anytime soon, so I am not worried about going long and am essentially “sell only.”
