The EUR/USD pair broke higher during the course of the session on Friday, clearing the top of the shooting star from Thursday. With that being the case, the market looks as if it is ready go higher, and the fact that we clear the 1.13 level has to be looked at as a very bullish sign. With that being the case, the market is more than likely going to reach towards the 1.14 handle above, and then eventually the 1.15 level.
On a move above the 1.15 level, we feel that this market may have changed trends at that point and it becomes a buyer’s type of situation. Pullbacks at this point in time should have plenty of support though, because we have recently had a very strong consolidation area between the 1.11 level on the bottom and the 1.13 level on the top, which is now supported below current action.
The Euro has been oversold for quite some time, and you also have to look at the longer-term chart and a longer-term feel of the market. While the overall feel of the market is bullish, we have not broken out yet. Yes, we broke out of that tiny consolidation area, but the 1.15 level is much more momentous. When you look at the chart overall, we are in the middle of an ascending triangle, and that should eventually break out to higher levels.
If we do break above there, it is a massive trend change in our opinion in this becomes a “buy-and-hold” type of market and a “buy on the dips” type of situation. It really comes down to your preference and trading style, but ultimately we do think that this market will reward the buyers and not the sellers.
The only way that we would start selling this market again as if we break down below the bottom of the uptrend line that is much lower than current levels right now. That looks very unlikely, so we fully anticipate that sooner or later the Euro becomes the currency du jour in the Forex world.