• The British Pound has fallen during the early hours here on Tuesday against the US dollar again, but really, at this point in time, we seem to be just hanging around the 1.34 level.
• The 1.34 level is an area that I think is important because it is in the middle of the overall consolidation range that we had been in.
• The 50-day EMA sits just above, and that causes some resistance as well, but what I really find interesting is that we sliced through a major uptrend line, fell to the 200-day EMA about a week ago, bounced from there, and then failed at that previous uptrend line in the 50-day EMA also.

With this, I think you've got a situation where the market will probably continue to see a lot of resistance above. And therefore, I do prefer shorting this pair if I have a position.
 

I Use This as an Indicator

Truthfully, my favorite use for this market is to see how the US dollar is performing because if it's strengthening here, it's really going to put a beating on something like the euro, typically. With this, I look at the fact that the British pound has been so strong over the last couple of years in comparison to the euro, the yen, the Canadian dollar, and other currencies, and I use this as a secondary and even tertiary indicator with other trades.
 

(Click on image to enlarge)

If I had to put a position on would be short here, but I think the 200-day EMA will continue to be a bit stubborn. If we were to break down below the 1.32 level, then I think the bottom falls out, and in that environment, you are more likely than not to see the US dollar strengthening against multiple currencies.
 

If this market breaks above the 1.35 level, then maybe we go back to the 1.36 level, but that still doesn't have us breaking out of the range. All things being equal, I think we're drifting lower.

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