Daily Forex Reports | by FX Empire | Thursday, 24 December 2015 05:52 UTC
The EUR/USD pair fell during the course of the session on Wednesday, breaking below the bottom of the shooting star that formed on Tuesday. This of course is a very negative sign, and we had seen quite a bit of moving parts just above during the previous session that suggested that the sellers could get involved. The 1.10 level above is a large, round, psychologically significant number, so that of course offers a reason for the market to continue selling off. Those areas tend to bring out a lot of order flow, and as you can see recently we have seen quite a bit of sellers.
You can also see that we have a yellow ellipse marked on the chart, and that is because not only have we seen quite a bit of resistance in that area, but also because we see the 50% Fibonacci retracement level at that area. Adding more bearish pressure is the fact that the 100 day exponential moving average sits right at the shooting star from Tuesday. With that being the case, the market looks as if it is ready to continue drifting lower but we also recognize that the 1.08 level below is massively supportive, as it is the bottom of the overall consolidation area. A break down below the 1.08 level would be massively negative, as the market should then reach down to the 1.05 level after that.
On top of the 1.0 level below as being a large, round number, it was also the most recent low, and as a result we believe that the market will be attracted to that area on a break down. Because of this, the market should continue to be very so we are fairly comfortable selling every time this market rallies and shows any type of resistance. In other words, this is essentially a “sell only” type of pair, at least until we break above the recent highs out the 1.1050 level, and quite frankly would be much more comfortable breaking above the 61.8% Fibonacci retracement level, which is just above the 1.11 handle.
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