The EUR/USD pair initially fell during the day on Tuesday, but found buyers below to turn things back around and form a nice-looking hammer. The hammer of course is a bullish sign, and if we can break above the top of it we should go higher. We think that the 1.13 level above is of course a pretty significant as far as resistance is concerned, but if we can get above there the market then should be free to go towards the 1.15 level. The 1.15 level of course has been rather resistive over the longer term, so we of course will pay quite a bit of attention once we get above there. However, we essentially have this market as the “line in the sand” that the sellers hold at the moment. In other words, if we can break above there, the trend will have changed for the longer term in our opinion.
We do think that’s going to happen given enough time. We look at pullbacks as potential buying opportunities, as we have recently seen buyers return to this market every time we do fall with any significance. Recently, we have been bouncing around between the 1.11 level on the bottom, and the 1.13 level on the top. This is why we think a break above the top of the hammer would in fact be so significant, because it breaks out of that area.
Looking at this chart, you can see that there is an uptrend line below, and that of course continues to be the focus of longer-term traders in our opinion. Nonetheless, even if we break out to the upside though, you have to keep in mind that there is a significant amount of bearish pressure that we have to overcome. Trend changes tend to be very messy affairs, and as a result this does not surprise us at all. We have no interest in selling this pair at the moment, as there are far too many areas below that could cause support to appear in this marketplace yet again.