The EUR/USD pair went sideways initially during the day on Tuesday, as we continued to tread water just below the 1.14 handle. We did break out to the upside, but as I write this, we are still fighting resistance at the 1.1425 region. I think given enough time, we will have to make some type of decision, but currently it looks as if the market is simply consolidating with a slightly upward bias. If we can break above the 1.1450 level, I think that suggests that the 1.15 level above will be targeted. When we finally break above that, things will change, the market should continue to go much higher. A break above the 1.15 level should then give way for a larger move to perhaps the 1.18 level after that.
Buying pullbacks and side to side trading
I believe that the best way to play this market right now is to simply by pullbacks and trade range bound systems. If we did breakdown below the 1.1375 level, the market could drop from there. We are facing a massive amount of resistance above at the 1.15 handle, so it’s going to take a lot of work to get above there. Ultimately, if we can do that, I think it becomes a longer-term “buy-and-hold” scenario that people are willing to jump into. I don’t really have much in the way of a desire in selling, as the market looks to be well supported underneath. However, I don’t know that the market is ready to go anywhere, least not in the short term. However, once we get testimony from Janet Yellen in front of Congress, that could move the US dollar, and then by extension, move this pair in one direction or the other, depending on how she talks about the US economy.
Written by FX Empire