British pound rallies but finds resistance on Tuesday

The British pound rallied significantly during the day on Tuesday, reaching towards the 1.35 handle. However, this is where the previous uptrend line crossed, and is starting to offer significant resistance. Because of this, it’s likely that we could continue to see a lot of volatility in this area, but ultimately I think we will see sellers come back. However, in the very short term I think we will continue to bang around in this general vicinity. The US dollar continues to strengthen overall though and paying attention to the 10-year treasury markets will be crucial, as it gives us an answer to where interest rates could go next. I believe that the market will ultimately favor the US dollar given enough time, so with that being the case it’s likely that we should see a bit of bearish pressure jump into this market. I would anticipate a move to the 1.33 level on a break down, and then possibly the 1.30 level after that. If we did rally from here, I would be a bit cautious about buying, at least not until we break above the 1.3650 level, an area that was crucial in the past.

There’s a lot of confusion out there, so a bit of a messy bounce around in this area makes quite a bit of sense, as traders continue to weigh all issues out there as there are a lot of moving pieces. We have been in a downtrend for a while, we have broken through a significant uptrend line, so now we need to see if there is more momentum to the downside.

GBP/USD Video 23.05.18