The EUR/USD pair initially fell on Tuesday, but broke above the 1.1750 level to continue higher. Ultimately, the market looks likely to find plenty of noise, and I think if we can break above the top of the range for the session of the day, we then go towards the 1.18 handle, and then perhaps the 1.1850 level after that. I believe the pullbacks continue to offer buying opportunities, as the 1.17 level underneath continues to be important. Keep in mind that the US dollar has been strengthening over the last several sessions, and I think that the market needs to bounce. However, if we were to break down below the 1.17 level, the market could then go down to the 1.15 level which was the scene of a massive breakout recently. That break out reads that the EUR/USD pair should then go towards the 1.25 level over the longer term, but I think it’s unlikely that we are going to see that anytime soon. I think this is a longer-term trade, perhaps one that lasts for months, if not a couple of years. Therefore, a pullback to the 1.15 level is in a huge surprise, and certainly is a viable thesis.
That being said, I still prefer buying this pair than selling it, so again, if we can break above the top of the range for the session on Tuesday, I’m willing to put money to work. Alternately, if we pull back from here, I’m looking for some type of supportive candle to start buying as well. Alternately, short-term traders may be willing to sell this market on a breakdown but after the resiliency that we have seen during the day on Tuesday, I think that a bounce is very likely to happen before any type of selloff.
Written by FX Empire