The EUR/USD pair was quiet during most of the trading session, but as the Americans took over the pair rallied towards the 1.19 handle. This is a market that has very positive signs on the weekly chart, in the form of a massive bullish flag. Because of this, I believe that we are about to see an explosive moved to the upside, but it might be after the holidays. With this in mind, I am a buyer of the EUR/USD pair in general, as I recognize that once we break out, this flag could send the market is high as 1.32 by the time the move is over. That of course is a long-term outlook for the market, but it gives me an upward bias in general.
In the short term, I look at the 1.1850 level as offering support, just as the 1.18 level will. Because of this, I think pullbacks will be nice buying opportunities, and on the first signs of support I’m willing to go long. I believe that we will run into a significant amount of resistance at the 1.20 level above, and even more so with the 1.21 handle. Once we clear that area, it’s then time to enter a more “buy-and-hold mode”, but that’s probably not for today. In the meantime, I simply continue to buy these dips to build a larger position as the EUR looks ready to go much higher, especially if the ECB cut back on quantitative easing as people expect them to do so early in the new year.
Written by FX Empire