The EUR/USD pair rallied during the day on Tuesday, breaking above the psychologically important 1.10 level. We even reached as high as the 1.11 level during the day, but it seems as if the market is going to continue to offer buying pressure on short-term pullbacks, and I believe that the 1.10 level now should offer support in a market that is ready to continue going higher. If we can stay above that level, I believe that the market becomes a “buy on the dips” situation, and that we will continue to do so. I don’t know that the market is going to be able to break down, but I also don’t think that the market is going to explode to the upside either. We have a lot of noise between here and the 1.12 level, which is a longer-term target for the buyers.
Bullish bias, volatile situation
Now that we have broken above that level, it looks very likely that the market will continue to find buyers, as this was an obvious barrier for traders. We not only have the large, round, psychologically significant number, but we also have the gap that formed in that area. That of course would of been very resistive, and now that it’s been broken it’s a very bullish sign and I believe that the sellers are most certainly on the back foot right now. However, there is a significant amount of noise between here and the aforementioned 1.12 level, and therefore is can be very difficult to hang onto a longer-term trade. I believe that short-term back and forth trading with an upward bias is what we have to look at for the next several weeks, if not months. We are entering the summer months, and that tends to be a little less volatile and has less momentum than other times of the year typically.
Written by FX Empire