The EUR/USD pair gapped lower at the open on Monday, but then turned around to fill that gap. We have fallen since then, but continue to find support near the 1.1850 region. A breakdown below there census market looking to the 1.1750 level, but I think the market may try to make a stand in this general vicinity. I suspect that given enough time, there will be buyers but I would be very cautious about jumping into this market right away. I suspect that it’s probably best to wait for a daily supportive candle before risking any trading capital. This is a market that has recently gone parabolic, so a pullback makes sense. I believe that given enough time, will try to break above the 1.20 level substantially, but it’s going to take some momentum building.
Because of this, I am very patient when it comes to trading this pair, and I think that right now it is probably going to be heavily influenced by high-frequency trading more than anything else. Because of this, I’m more than willing to sit on the sidelines and await a much cleaner signal that we have now. Keep in mind that this pair tends to go higher with risk appetite going higher, so pay attention the stock markets, that could give you a bit of a “heads up” as to where we go next. Ultimately, the pair is bullish, but just got ahead of itself so it makes sense that we may have to take a bit of a breather. I think there are plenty of support levels underneath, so I am hesitant to short this market. I believe that the “floor” is probably closer to the 1.15 handle underneath, with several supportive levels between here and there.
Written by FX Empire