EUR/USD
The EUR/USD pair fell a bit during the day on Wednesday, testing the 1.05 level. This is an area that has been supportive several times in the past, so it’s not a surprise that we bounced off that level. However, I believe that it’s only a matter of time before the market breaks down below there so I think that a move below the bottom of the candle is a selling opportunity that should send the EUR down to the 1.0350 level. However, I believe that the more likely move is a bounce that we concert selling. The 50-day exponential moving average above continues to offer resistance in my estimation, so I would love to see and exhaustive candle in that area. Given enough time, the Euro should continue to sell off.
GBP/USD
The British pound initially tried to rally during the day on Wednesday, testing the 1.25 level. That’s an area that continues to be a bit of a magnet of the market, and of course price. I think if we can break above the 1.2550 level, the market should then reach towards the 1.27 level. There is plenty of support below, and the 1.24 level underneath continues to offer a bit of a floor. I believe that the market will continue to find buyers every time we pull back, and that the support extends down to at least the 1.2250 level, if not the 1.20 level. Ultimately, I think that we could have a significant selloff ahead of us, but that should be it. That should be when the absolute turn in the trend happens. The Article 50 selloff that comes after the announcement will almost undoubtedly be the absolute bottom in this market as longer-term traders will come in and pick up the British pound on the cheap as they have been doing. In the meantime, I expect bullish pressure to return repeatedly, offering nice short-term buying opportunities.
