The EUR/USD pair tried to fall during the session on Monday, but as you can see enough buyers stepped into the market to force the market to bounce. This bounce is a continuation of the bouncer we saw on Friday, as the 100 day EMA offered enough support for the market to continue dancing around in the consolidation area between the 1.3550 level on the bottom, and the 1.3 level on the top. The fact that the Monday candle ended as a hammer has us thinking that the market will more than likely reach the 1.38 handle over the course of the next several sessions.
All this being the case, we do not expect this market to make any large moves of the next couple of weeks, just simply continue to grind higher with a slightly bias to the positive side. Even if we do break above the 1.38 handle, we suspect that the 1.40 level above is going to be massively resistive as well. It is because of this that we think most of the gains will be hard-fought, but certainly it appears that the Euro is gaining on the Dollar over the longer term at this point.
As far as a “floor” is concerned, we believe that the 1.35 level will serve as that support area. It is not until we break below there that we think selling for any real significant amount of time can be done. With that in mind, we are essentially buying the dips going higher, and fully expect a lot of short-term traders will flood the market as well, since it is showing a nice upward bias now, and the 100 day EMA has proved to be supportive. With that being the case, we are more than willing to buy this market on a break of the top of the Monday hammer, which of course is a classic technical analysis signal to start buying. Granted, there is some noise above, but we are fairly confident in this trade, and therefore are more than willing to place to trade.
Written by FX Empire