British pound drifts lower during Monday session

The British pound fell during the trading session on Monday, reaching down towards the 1.33 handle. The Americans were away celebrating Memorial Day, and that of course would have had an effect on liquidity late in the session. Perhaps this is why the 1.33 handle held again, but I think it’s only a matter of time before we slice through that level. Clearly, we have been making “lower highs”, which is the very essence of a downtrend and of course bearish pressure in general. If we break down below the 1.33 level, then I suspect that the next target will be the 1.30 level after that which has a major amount of psychological importance.

Rallies at this point are to be treated with suspicion extending all the way to the 1.35 level above, which was where the major uptrend line had sliced through, and I think that of course will be massive resistance above. I think signs of exhaustion are to be sold, and that the interest rates in the United states will continue to climb via the bond markets. While the British central bankers are planning the possibility of an interest rate hike this year, the Federal Reserve is almost assured to have at least three. Obviously, that makes this a very attractive trade, as the US dollar continues to attract so much in the way of money. I don’t know if we can break down below the 1.30 level, but the move below there would in fact attract a lot of attention.