The GBP/USD pair fell rather significantly during the session on Tuesday, as we broke slightly below the 1.48 handle. This of course is a very negative sign, and as a result it’s likely that the market should continue to go even lower. If we can break down below the bottom of the range for the day on Tuesday, I am willing to start selling as we should reach towards the 1.45 handle over the longer term. I do not think that this market has any real strength in it to rally for a significant amount of time, and with that being the case I think that a short-term rally is a selling opportunity due to the fact that it will be difficult for this market to hold gains for any real length of time during the liquidity of holiday trading. I also believe that the longer-term downtrend is most certainly working against it, so given enough time sellers will return again and again.
US Dollar Strength
US dollar strength continues to be one of the mainstays of the Forex markets, and I believe that it’s only a matter time before that theme continues. I believe that a break down below the bottom of the range sends this market down to the 1.45 level, although I don’t think it will be very easy to get there. This is a market that should continue to be very steady and drift lower. As you can see we have been grinding away lower over the longer term, and with that I believe that the longer-term downtrend that started so long ago is ready to continue.
That’s not to say that the market will bounce from time to time, surely it will continue doing that, but the overall downward channel continues to offer signs that the sellers are most certainly in control when it comes to the British pound.
