EUR/USD
The EUR/USD pair rallied initially during the trading session on Wednesday, but gave back most of the gains. This is a very unimpressive attempt at a rally after forming a hammer during the previous session, so I think that it’s only a matter of time before the sellers return. I see a significant amount of resistance at the 1.17 level, and quite frankly doubt we can break above there. The head and shoulders on the daily chart measures for a move down to the 1.13 level, so that is my longer-term target and I have no interest in trying to buy this pair until we would close on a daily chart well above the 1.17 level, something that doesn’t look very likely to happen. If we did break above there, then I think we go to the 1.21 level over the longer term.
GBP/USD
The British pound fell during the trading session on Wednesday, as we continue to go sideways in general. The purple rectangle on the chart looks very likely to continue to contain this market, but the uptrend line and the 1.30 level underneath look likely to hold the market higher. I think that every time we do get a little bit of a bounce, it’s likely that we will go looking towards the 1.3250 region, which extends to the 1.3333 handle. If we can break above there, then the market is likely to go looking towards 1.35, followed by the 1.3650 level. I think there is a significant amount of interest in buying this pair currently, but if we were to break down below the 1.30 level, the market will probably unwind to the 1.2750 level rather quickly. However, I believe that there’s only about a 20% chance that happens.
