EUR/USD Forecast March 26, 2012, Technical Analysis

The EUR/USD rose on Friday to trigger the buy signal on top of the hammer from the Thursday session. However, the 1.3250 level above it is still resistive up until the market clears the 1.33 level. With this in mind, this was a signal that we ignored as this kind of tight move is a great place to lose money in our experience.

The pair continues to be erratic over the long term though, and as such it is a “quick market” in which you won’t want to be holding a position in either direction too long. The market is one that is still being held hostage by headlines, so a position that is profitable one minute can suddenly be negative on errant comments the next. This market has been a challenging one lately to say the least.

The action on Friday was indeed bullish, and the market did close towards the top of the daily range, and a clearing of the 1.33 level should prove to be a good buy signal, and we are ready to but at that level. The area could also provide a lot of resistance, and as such we need to see the daily close before actually entering into a position.

The 1.30 level below is the “line in the sand” for the bulls as a breakdown below that area would be massively bearish, and we wouldn’t hesitate to do so hand over fist. The problems in Europe haven’t gone anywhere, and this is how we ultimately see the pair moving by the end of the year. The 1.25 level would be our target is the pair breaks below the 1.30 support level on a daily close. The downside could extend as low as 1.20, but traders should remember that the pair tends to bounce a lot, and it seems that the Euro has had a propensity to bounce on bad news and have a built in bid somewhat. At 1.35, even with a breakout and a long position, we are selling at the first sign of weakness.

EUR/USD Forecast March 26, 2012, Technical Analysis

Written by FX Empire