The EUR/USD pair rallied initially during the trading session on Monday, reaching towards the 1.1950 level above, and then pulled back towards the 1.19 level underneath. I think that the market is starting to struggle a bit, but that makes sense considering that we are a bit overextended. We have just crossed below the 24-hour exponential moving average, so a pullback could be coming. I expect to see a lot of support near the 1.1850 level though, and will look at any pullback at this point as a potential buying opportunity. When I look at the weekly chart, there is a bit of a bullish flag being attempted, and I think that could signal a longer-term “buy-and-hold” scenario. I do recognize that there is a lot of noise between here and the 1.21 handle though, so it’s not necessarily going to be an easy move.
Pullbacks of this point should continue to be value, if we can stay above the 1.17 level. It’s not until we break down below that level that I would consider selling this market, as that is the “floor” in the pair for me. If we were to break down below there, I would not only short this pair, but I would become very aggressively short as it would show a complete repudiation of the massive amount of bullish pressure that we have seen. That being said, I fully anticipate that a “buy the dips” attitude continues to pay off for those who are patient enough to get those opportunities, and of course have the wherewithal to hang on to those trades. Once we break above the 1.21 handle, that would signify that we have not only broken the weekly time frame bullish flag, but could go as high as 1.32.
Written by FX Empire