The EUR/USD pair went back and forth during the session on Monday, continuing to confound traders around the world. This is a pair that simply cannot decide which direction wants to go, but it is easy to see that the 1.30 level should offer resistance going forward, simply because it did during the session on Monday. The resulting candle of course looks very confused, and as a result we see this market as being very neutral in the extreme short-term.
However, we can see that there is a significant amount of support at the 1.29 level, so as a result we expect sideways action even though we have broken down through the 1.30 support level. In fact, we see the 1.30 support level as the top of a larger support level that extends all the way down to the 1.29 handle. It really isn’t until you clear that area that you can make a very strong case for selling. Once we get down there though, there will be other hurdles to be concerned about.
With all that being said, this pair will continue to grind and chop traders up over the next several weeks. In fact, we may be trying to form the bottom of the summer range at the moment. There is the possibility that we simply stay in a range for the summer months, as it was the norm years ago before the financial crisis. If that happens, overall you will see the market go back and forth and truly not show any signs of direction for several months.
This isn’t to say that the market will be tradable, quite the opposite actually. If the market does get range bound, we think that this market could bounce around between the 1.29 handle on the bottom, and the 1.32 level on the top. That is a 300 pip range that the market could bounce around in over those war months, and if that’s the case short-term traders should do quite well as it is plenty of room. On the other hand, we do manage to break down below the 1.29 handle, we could see a push down towards the 1.28 level.
Written by FX Empire