The EUR/USD pair initially fell during the course of the day on Friday, but as you can see found quite a bit of support at the 1.35 handle. This area has been supportive for some time now, and is the bottom of a larger consolidation area as far as we can see. The 1.37 level above is the resistance area, and as a result we feel that the market could be bought on a break of the top of the hammer as it shows that the bottom of this consolidation area does in fact continue to prove itself.
This is a market that has two central banks competing to weaken their currencies at the moment, and with that we believe that this market will continue to chop around, and as a result will be more or less a short-term market only. However, we feel that we are at the very extremes of negativity in this market, and as a result feel that a bounce should be coming. More than likely, the 1.36 level will continue to be a bit of a magnet for price.
On the other hand, if we break down below the bottom of the hammer, this would show a significant amount of selling pressure coming into the marketplace and the support level finally giving way for the sellers to push the market down to the 1.33 level.
Ultimately, we feel that this market will decide which direction wants to go next couple of days, and as a result it is a bit of a binary trade as far as we can see. We are going one way or the other, and we simply just want to let the market through which direction wants to go, and follow it. Regardless, it is going to be a bit choppy but at the end of the day we feel that this market should more than likely go higher. We could even go to the 1.37 level, but quite frankly we don’t feel that it’s worth taking that kind of risk and tying of trading capital in a market that’s essentially sideways.
