The Euro bounce around during trading on Thursday, initially tried to rally, but then rolled over to test the 1.23 level again. I think that this level could be supportive, but I also recognize that we have been in a downtrend for a minute. I think that the 1.21 level underneath is going to continue to be very important, and essentially the “floor” of the uptrend. I think that the uptrend line from the daily chart still remains intact, just as the target of 1.32 is based upon a break of a bullish flag on the weekly chart. The 1.21 level underneath being broken to the downside would be very negative, but currently it looks as if there are plenty of minor support levels underneath that could come into play. When you look at the daily chart, we are simply chopping around, and I think that continues to be the case.
The 1.25 level above continues to be a major barrier, and if we can finally turn things around and break above there, the market then can go to the previously mentioned 1.32 handle. I believe that the market continues to attract value hunters, but at this point I believe that we are probably just trying to build up momentum that is needed to continue the longer-term rally. We are currently in a consolidation phase, and that tends to lend itself to range bound strategies. In the short term, I believe we remain somewhat range bound.
Written by FX Empire