The GBP/USD pair broke down during the course of the month of February, slicing through the 1.40 level. This is a big deal in my opinion, so I’m looking at this market as one that you can sell again and again. I think you will have to go to short-term charts to do so though, because there is more than enough noise between here and the 1.35 level below to keep this market somewhat afloat and volatile.
All things can change though, because quite frankly a lot of this is due to the idea of Great Britain leaving the European Union. If they choose not to, that could very well turn this market right around and send it much higher. Ultimately though, I think that there is still going to be a proclivity for the US dollar to be favored as it is the safety currency of the two.
At This Moment, Selling Short-Term Rallies
At this moment in time, I’m looking to sell short-term rallies that show signs of exhaustion. I think that most traders will probably last about 8 hours, but I still have a natural proclivity to sell, unless of course that announcement comes out that the British are staying in the EU. Even at that point though, I think it would be difficult for this pair to reach above the 1.45 level for any real length of time.
I think that the noise below will make this rocky to the downside, but you still have to believe that longer-term downtrend should continue going forward as there’s not a whole lot out there that could change all of this beyond that vote, and even then won’t see much of a change as far as the fundamentals when it comes to the US dollar and of course Great Britain. Ultimately, I believe that 90% of trading this month will be bearish.