The EUR/USD pair initially tried to rally during the trading session on Tuesday but rolled over significantly to show signs of negativity. However, by the end of the day we bounced a bit and it looks like we continue to be very resilient about trying to break out to the upside. The 1.25 level above is massive resistance, and I think that if we can break above there, the market is free to go much higher, perhaps to the 1.32 handle over the longer term. I believe that the uptrend line underneath should continue to be very supportive, just as the 1.21 level should be as well. I think that the market continues to be very volatile, but it certainly seems to have a strong upward proclivity in general. I’m willing to buy short-term pullbacks, but only in small bits and pieces.
The GBP/USD pair broke down significantly during the trading session but bounce just as significantly to show signs of resiliency as well. I believe that the British pound will continue to see a lot of attention from traders around the world, and I think that we will eventually see the market try to break above the 1.43 level. Short-term pullback should offer buying opportunities, and I think that the 1.40 level underneath is massive support. Longer-term, the market looks likely to go to the 1.45 handle, which is a major round number and show signs of rather stringent resistance based upon longer-term charts.
If we break down below the 1.40 level, that would be very negative, and I think that could be the beginning of a downward move towards the uptrend line that sits just below the 1.3650 level. Ultimately, this is a market that I think although choppy and difficult, still has plenty of buyers.