This is a crucial level as the 200 day approaches it and it has been a significant support level previously. With that being the case, I think that the market probably continues to see this area is important, but if we break down through this level, that tells you that the overall trend may be coming to an end.
On a breakdown below the 1.37 handle, then it is likely that we could go looking towards the 1.35 handle, which of course is a round figure, but quite frankly by the time we get down to this level it is possible that we break down below here and continue to go much further to the downside. Breaking down below that level would begin a massive amount of negativity, and probably opens up massive losses.
On the other hand, if we turn around and rally from here, we need to take out the 1.40 level to the upside, then it is possible that I might be a buyer, but we still need to deal with the massive 1.42 handle, which is not only significant resistance recently, but it is also significant resistance on a longer-term standpoint. Because of this, we may have seen the top in the British pound, but that does not necessarily mean that it will be easy to break it down. If we did take out the 1.42 handle to the upside, that would be a monumental turn of events and could send this market much higher, perhaps reaching towards the 1.45 handle and beyond.
We are most certainly on the precipice of something rather important, so it will be interesting to see how this plays out. As far as Friday is concerned, it is the jobs number but then again, we also have the Independence Day holiday over the weekend, so it is very likely that we will see a lot of volume simply disappear from the market right after the announcement. With that being the case, unless we get some type of massive shock in the employment figures, I do not necessarily think that Friday will solve any questions.
