The EUR/USD pair fell during the session on Thursday, triggering the sell signal from the shooting star on Wednesday. However, by the end of the day we did see a little bit of a bounce to confirm that there was definitely noise right around the 1.33 area. We still believe that this market will continue to go higher over the longer term, but a pullback seems to be in the works, and this of course makes sense as the G20 meetings loom and traders worry about any type of statement.
The 1.35 level will continue to be resistant, but we think that the market looks like it wants to go down rather than up for the short term. However, we see so much noise below that it’s just simply a much easier trade to buy vanities to sell on signs of support. With this being the case, we begin the look at various levels for support in order to go along of this market. We feel the 1.33 is a likely candidate, just as the 1.32 level is. Also, if we managed to fall significantly, 1.30 would make an excellent place to start going long in this market.
Going forward, this pair will be a dogfight between two central banks are trying to devalue the currency. In one corner, you will have the challenger, the European Central Bank and in the other you will have the champion of currency devaluation the Federal Reserve. While the Europeans will certainly do things to scare the buyers of the Euro from time to time, the ECB is way out of its league when it comes to fighting the Federal Reserve.
Ultimately, the Euro should continue much higher, but we are looking for some type of supportive candle in which start buying at this point. We think that the market will eventually reach the 1.50 level based upon the inverted head and shoulders the got broken recently, but we may have been of messiness to contend with in the short term. As far as selling is concerned, we simply won’t do it just because there is so much between here and 1.30 that could cause problems.
Written by FX Empire