The EUR/USD pair initially rallied on Monday, as we reached towards the 1.1225 level. We did pull back to the 1.12 handle, an area that should offer a certain amount of psychological support. If we can bounce from here, I believe the market will then go looking towards the 1.13 level above. It will be very choppy regardless of what happens, because there is so much in the way of noise right now. On top of that, there is high-frequency trading, which is increasing in this pair. If we did breakdown below the 1.1150 level underneath, the market will then go looking for the 1.11 handle after that. The market continues to show significant choppiness, and therefore it’s difficult to put a sizable position on. Quite frankly, I believe that trading small is about the only way to go currently.
I do have a longer-term target of 1.15 above, which would be an extension to the top of the overall consolidation that the market has been in for almost 3 years. The market also has support below at the 1.05 handle, so I think this is a market that continues to bounce around, perhaps offering a little bit of bullish pressure, but I would be surprised if we broke above the 1.15 handle above. I believe that the volatility continues, but until we break out of the consolidation, you must assume that we will continue to test of both levels of that rectangle.
By trading in small positions and adding as you move into profit, you can save yourself a lot of trouble and fear in a market that almost certainly will go back and forth over the next several sessions. Truthfully, there will probably be better trading pairs out there, but if you are insistent on trading this market, you should continue to see bullish pressure longer term.
Written by FX Empire