British pound falls initially on Monday only to find support

The British pound filled to start the session on Monday, reaching down towards the psychologically important 1.34 handle before bouncing. We have shown a significant amount of bullish pressure, but I think that the previous uptrend line, highlighted by the yellow ellipse on the chart, could be an area of significant resistance, as it was so important for support in the past. If we find resistance there it’s more than likely that we will roll over and go looking towards the 1.34 level underneath, which of course has shown support previously. A breakdown below that level would free the market to go much lower, perhaps reaching down to the 1.33 handle and possibly even the 1.30 level after that.

Rallies at this point are not to be trusted, at least not until we break above the 1.3550 level. At that point, it’s possible that we turn things around completely, but I believe that we will continue to see a lot of US dollar strength in the near term, and perhaps extending through the rest of the summer as interest rates continue to rise in the United States. I anticipate that once we break down below the uptrend line, it was the first signs of serious trouble for the British pound. I don’t think this is necessarily a concern about the British pound so much as it is simple US dollar strength. I’m looking for some type of exhaustive candle near the 1.3475 level to start shorting.

GBP/USD Video 22.05.18