The EUR/USD pair has been very noisy over the last several weeks, but the last couple of days have been a bit of a pullback. Ultimately, the market looks likely to find support just below, as the markets have been a bit overextended. I think that as we bounce from here, the market will probably go looking towards the 1.20 level above. If we can clear the 1.20 level, the market will more than likely continue to go to the 1.21 handle, but I think it will be very noisy. After all, there are a lot of questions about what the ECB does next, and of course a lot of questions about the United States dollar.
If we do continue to go lower, the next obvious support level for me is the 1.1850 level, which should be even more supportive. On the weekly chart, we had formed a bullish flag, and it looks now as if we are trying to test the area that had previously offered resistance. With that in mind, I think it’s only a matter of time before the buyers get involved so I’m looking for either a bounce, or perhaps some type of supportive daily candle to start building a position back up to anticipate a breakout. Move above the 1.21 handle sends this market much higher, and for what it’s worth – the measured move of the bullish flag is for 1.32 to be tested.
Written by FX Empire