After initially gapping higher on Monday, the EUR/USD pair has fallen apart. This was a “buy the rumor, sell the news” type of situation when it came to the French elections, and this pullback has been absolutely brutal. We have completely wiped out the gains from a couple of sessions previously, and now it looks like the market is going to continue to struggle. As I write this, there has been a bit of a bounce from the 1.0875 level, but given enough time I think that the sellers will return. After all, on the longer-term charts we have a technical signal that we need to go lower.
There’s a gap below on the daily charts that suggest that the market needs to fall in order to fill it. Because of this, I believe that exhaustive candles could be and I selling opportunity, and that should be a nice signal to get involved to the downside. I believe that the 1.0750 level underneath will be supportive though, as it would be a fill the gap move completed. If we managed to break above the 1.0940 level, I think at that point the buyers will try to get this market to reach towards the 1.10 level above. Either way, I believe that the market will continue to be very choppy, but given enough time we will come up with a much clearer direction. The meantime, I think that it’s easier to sell rallies based upon the massive negativity that we have seen. The EUR/USD pair continues to be very back and forth, but the market seems to favor sellers in the short run. This is a market that will have a lot of noise associated with the problems in the European Union.
Written by FX Empire