EUR/USD
The Euro initially fell during the course of the day on Thursday, but as you can see bounced significantly in order to form a bit of a hammer. Obviously, the hammer is one of the stronger signals that you can get in the market and therefore I do think that we are going to go higher from here. The real question of course is going to be whether or not we can sustain any type of move higher. I think that for the short-term, that’s probably true. However, given enough time I think that all of the issues in the European Union will continue to plague the Euro, and therefore I am much more comfortable shorting this market once I get a signal to do so.
GBP/USD
The British pound fell again during the day on Thursday, as we continue to chip away at the massive amount of support near the 1.30. I believe that the support runs all the way down to the 1.28 handle, so it’s likely that we will have to continue to try to go lower, and therefore short-term rallies are probably selling opportunities going forward. That’s probably the best way to play this market, because there is so much in the way of support below that it is something that is certainly going to have to be worked to achieve, rather than something that should just happen right away.
I have no interest whatsoever in buying this market, and I recognize that the bearish pressure above is very real. With that being the case, the hire we go, the more likely I am to go looking for exhaustion that I can sell. After all, the US dollar will certainly be favored over the British pound after the recent vote to leave the European Union, and I believe that the pound will eventually find its way down to the 1.25 level.
