EUR/USD
The Euro initially fell during the day on Tuesday but bounced enough to form a little bit of a hammer. While this is a positive candle, quite frankly I’m not that impressed. After all, when you look at the chart you can see that we have been sold off in a very massive way, and almost in a straight line. In other words, this is a market that desperately need some type of bounce. Once we get it, we could very well see an exhaustive candle above that signals its time to start selling again. If we break down below the bottom of the range for Tuesday, that is also a selling opportunity. Ultimately, I have no interest in buying because I recognize of the 1.10 level above is essentially the “ceiling” in this market and I think will continue to function as such.
GBP/USD
The GBP/USD pair initially fell during the day on Tuesday, but bounced enough to form a bit of a hammer. By doing so, the market looks as if it is ready to try to bounce and offer selling opportunities at higher levels as far as I can see. The 1.20 level below continues to be the “floor” in this market, and as a result it’s likely that we need to bounce in order to finally break down below the level. Quite frankly, this is a market that has been in a long-term downtrend, as the exit vote has really put a lot of fear when it comes to the British pound into the market. With this, I believe that exhaustive candles above will be excellent opportunities the short this market again and again, preparing for the breakdown below the 1.20 level. I believe that there is essentially a “ceiling” at the 1.2850 level though, and although I recognize that a bounce is coming, I have no interest whatsoever in buying.
