EUR/USD
The EUR/USD pair rallied significantly during the day on Thursday, reaching towards the 1.1950 level. I believe that the 1.21 level above is now the “ceiling” in the market, and I think that it is only a matter of time before the sellers come back into this market and push even lower. We are a bit oversold though, so a bit of a rally would make sense year, and an opportunity to build up the necessary momentum to go lower. I have a target of 1.15 by the end of the summer, as it would wipe out the overall move that sent this market to the 1.25 handle. There’s a lot of volatility in this market but being oversold is something that is obvious to almost everybody involved, so this bounce makes sense. Selling rallies at signs of exhaustion continues to be the best way to trade this market.
GBP/USD
The British pound has gone back and forth during the day as well, as we continue to bounce around this uptrend line. We are just below the 200-day simple moving average, which of course attract a lot of attention also. I think that if we can break down below the lows of the day on Thursday, the market could go to the 1.33 handle, and then eventually the 1.30 level after that. I like the idea of shorting this market, and I believe that the 1.3650 level above will offer a significant amount of resistance, not just because of the large, round, psychological significance of the number and the previous price action at the level, but also the 200-day simple moving average sitting just at that level. At this point we are more than likely going to see this market unwinding below the bottom of the range of the day on Thursday and going lower, or perhaps we could see an explosion to the upside but I would not be a buyer until we get above the previously mentioned 1.3650 level.
