The EUR/USD pair went sideways initially during the day on Friday, but then broke down after the jobs number came out much stronger than anticipated. Because of this, the market fell towards the 1.1750 level underneath, which of course has a significant amount of support attached to it. What’s more important is that we are trying to form a shooting star the weekly chart, and at this point I think that rallies are selling opportunities. We are far too overextended at this point, so I don’t think that the market is one that you should be looking to buy as we are far too overextended and I think that a pullback would be healthy.
The 1.15 handle
I believe that the 1.15 handle underneath is the “floor” in this market, and I think that we may try to pull back to reach towards support. I don’t know if we can get all the way down to that level, but that is what I think will be the turning point in this market. If we were to break down below that level, we could go much lower. However, I think what we will see is that the market will eventually try to find some type of support underneath, but it may be several different sessions from here before we get to that point. I think that the market is overdone, so it didn’t take much to scare people out of the long euro trade. I would assume that the buyers come back, but I would prefer to see more value added before I went long. For the short-term, I believe that the sellers are about to have their way with this market as the parabolic move could not hang on forever at the rate we have seen.
Written by FX Empire