The GBP/USD pair initially broke higher during the course of the session on Monday, but turned back around to form a fairly negative looking shooting star by the time we closed. With this, it looks like the market is ready to go lower, and a break down below the Friday low would be reason enough to start shorting this market and aiming for the 1.50 level in my opinion. The British pound continues to sell off drastically against the US dollar and other currencies, but without a doubt this is the barometer of weakness that suggests that the British pound is going to continue to lose strength.
If we break above the top of the candle for the session on Monday, that is a positive sign, but quite frankly I feel that at that point in time we will simply look for resistive candles in order to start selling again, even if it’s just off of the short-term charts. Ultimately, I feel that we will eventually break down and then reach at least the 1.50 level, but quite frankly I feel that we could go lower than that.
US dollar confusion
The US dollar of course is confusing at the moment, simply because the Federal Reserve is confused. However, it appears that the British pound is without a doubt losing favor in the Forex world as we recently broke down below the uptrend line, and then came back to test the bottom of that uptrend line for resistance. We formed a shooting star and have fallen completely off of a cliff after doing that. Because of this, we could have a little bit of a bounce from here, but quite frankly I believe that it’s just going to be a selling opportunity at higher levels. I have no interest in buying, and will either sell rallies that show signs of exhaustion, or a break down to a fresh, new low and at that point would be willing to hang onto my short position for a while.
