The GBP/USD pair broke higher during the day on Wednesday, but as you can see struggled to continue going higher than the 1.49 level. That was an area that had previously been supportive, so it’s not a big surprise that it now has offered resistance. Quite frankly, I believe that this market will continue to find bearish pressure, as the US dollar is without a doubt the favored currency by Forex traders around the world. I think that it’s only going to be short-term bounces that we see as far as positivity for the British pound a done soon, so with that I feel that selling is the only thing you can do with any real confidence.
Ultimately, the British suffer due to the fact that the European Union and its economy is struggling so much. Because of this, I think that there is almost no way that this market will turn around anytime soon. There is a lot of concern in the world as far as economic growth, and while the British pound isn’t necessarily what I would consider to be a frontier currency, the reality is that as far as safety is concerned, we are almost stuck with the US dollar, the Japanese yen, and maybe the Swiss franc. Having said that though, even the Swiss are struggling because of the European economy.
Selling Rallies on Short-Term Charts
I am selling rallies on short-term charts that show signs of resistance. This is especially true when we are close to a large, round, psychologically significant number and a previous support level. Even if we did break above the 1.49 level, I would have to believe that the 1.50 level above would be even more resistive due to the psychological implications of that number been so much stronger than the 1.49 handle.
I think that eventually we reached down towards the 1.45 level, but it might take a while to get there. After all, this pair does tend to grind here recently, and we are close to the bottom of what could be thought of as a downward channel.
