The EUR/GBP pair had a fairly significant decline recently, but did manage to bounce off of the 0.70 handle. Because of this, we ended up going all the way to the 0.74 level last month, and I feel that it has reached significant resistance finally. Because of this, I believe that the area between the 0.74 handle and the 0.75 handle will continue to be a bit of a ceiling, thereby pushing markets to go lower from here. I do not have any interest whatsoever in buying this market, and I believe that we will continue to drift lower. The easy money has probably already been made at this point, but I still believe that selling is the only thing that you can do.
I believe that the market will head back to the 0.70 handle, which of course was supportive last time. I think it will be supportive again, but we will eventually break down below there. I believe that we will probably have to bounce a couple of times, and then eventually we’ll fall apart.
[CAD:FXAcademy CTA #121]Sell rallies
This pair is traded a very much the same as the other ones as far as I’m concerned, I am simply selling rallies as they appear. I think this will be especially true this market as we will drift lower and it will be more or less a short-term trading variety that appears. I have no interest in buying until we get well above the 0.75 handle, something that I don’t see happening this month. Even if we do get above there, you would have to be concerned about the 0.78 level above which is even more resistive in my estimation.
Ultimately though, once we do break below the 0.70 handle, I think this market has to the 0.68 level, and then the 0.65 level. It will take a while to get down to 0.65, but at this moment that’s my longer-term target. With this, I remain bearish although I recognize that this downtrend is a bit long in the tooth.
