The EUR/USD pair rolled over a bit during the trading session on Tuesday, as we went looking towards the 1.18 level underneath. This is an area that has been supportive in the past several sessions, and therefore it makes sense that we should continue to find people interested in trading this market at these levels. Buying a bounce is how I plan on playing the market, as we should then go higher and try to fill the gap at the 1.19 region. Even if we were to break down below the 1.18 handle, I think that there is plenty of support underneath, and that we should probably find even more buying pressure near the 1.17 level. Because of this, short-term traders may be able to short the pair underneath the 1.18 handle, but I would be very careful about doing so, as there is so much in the way of order flow there.
Ultimately, I believe that we are going to go looking towards the 1.21 handle above, and breaking above there opens up the “buy-and-hold” trade. A breakdown below the 1.17 level should send this market down to the 1.15 handle underneath, which of course is a large, round, psychologically significant number that will attract a lot of attention. Currently, I believe that we are simply waiting for the results of the tax bill in the United States, but longer-term I think that traders continue to favor this market. The market will continue to be very volatile, because quite frankly the news flow continues to be very disruptive as we negotiate the exit of the United Kingdom from the European Union.
Written by FX Empire