British pound breaks down during Tuesday session
The British pound has broken down significantly during the session on Tuesday, slicing through major uptrend line. If we can break down below the 1.3450 level, the market will more than likely unwind rather drastically. I believe that the 1.30 level underneath would be a bit of a target, with perhaps the 1.33 level offering short-term support. Rallies at this point need to be treated with suspicion, as we have made a slightly lower low at the time of recording in this market. I think that the British pound will continue to suffer at the hands of the US dollar, as quite frankly the Federal Reserve is the only central bank in the world looking likely to raise interest rates anytime soon. That being said, it is likely that there might be at least one interest rate hike out of London, but that pales in comparison to the US situation.
The way we break down during the day tells me that there is a major shift in attitude, and that the trendline is either going to be broken heart, or at the very least is giving way longer-term. That tells me that we have a downward move coming over the next several weeks. This is a trendline the goes back a couple of years, and the fact that it is failed is a very negative sign. Rallies at this point would not be trusted until we break above the 1.35 handle on a daily close, something that doesn’t look very likely.