(MENAFN- Daily Forex)

• The British pound initially tried to rally against the US dollar during the trading session on Wednesday, but it looks as if we are starting to fall a bit, perhaps trying to break down below the crucial 1.34 level.
• If we break down below here, then the 1.33 level is an area that I think will be very important. This is especially true considering that we have seen some action in the past, and of course we have seen the 200 Day EMA aiming for that level as well.

Technical Analysis

I think at this point in time we are forming a“H pattern”, but we have not confirmed it yet. The 1.33 level underneath is the trigger to have that going much higher. If we were to break down below that level, then I think the 1.32 level gets targeted, and then eventually the 1.30 level. All things being equal, I still see this as a market that has a lot of overhead pressure on it, and I think it's probably only a matter of time before we fall from here. That being said, we could rally in the short term and a move to the 1.35 level isn't completely out of the cards, due to the fact that we have seen it happen a couple of times over the last several trading sessions.

Ultimately, this is a market that I think will continue to be noisy, and it's worth noting that the British pound has outperformed many of his contemporaries against the US dollar, as it rallied much quicker than most of them, and before then, as the US dollar was strengthening, the British pound at least“was less bad” than the others. In other words, I think this is a very important markets to pay attention to because it can give you a bit of a“heads up” as to how the US dollar is going to behave against multiple other currencies.

It's worth noting that the FOMC Press Conference was the absolute top so far, and since then we've seen the US dollar strengthen quite nicely. That's quite a feat for a currency that was supposedly“dead in the water.”

Potential signal: I'm a seller of this pair below the 1.33 level, with a stop loss at 1.34 above. I'd be aiming for the 1.32 level where I would move my stop loss to break even, and then aim for the 1.3050 level.

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