The EUR/USD pair bounced a bit during the session on Thursday, showing the 1.2850 level to be somewhat supportive. We basically have retraced about 60% of the losses from the session on Wednesday, leading me to believe that the market is simply consolidating. I think that the 1.28 level below is massively supportive, so until we break down below there I don’t think that there’s any longer-term selling opportunities.
On the other hand, we could go a little bit higher, but I still see the 1.30 level to be significantly resistive. If we do get a resistant candle in that general area, I would not hesitate to sell for a short-term selling opportunity as the market should continue to bounce around back and forth between these two areas.
The alternate scenario
The alternate scenario would of course be breaking above the 1.30 level, and as a result we would more than likely head to the 1.32 handle next, which of course is where we had seen a significant gap to the downside, and as a result more than likely we should see a significant amount of resistance in that area as well. That would also be an area where I would not hesitate at all to sell a resistant candle. The bounce would be somewhat significant, but in the big scheme of things I still don’t think that it would change the trend. No, it is not until we break above the 1.33 handle that I would consider the trend changing.
Ultimately, I think that this pair could go down to the 1.25 handle, but we need to get below the 1.28 level first, perhaps on a daily close as it would be a little bit more confidence building as far as I can see. The market is most certainly in a downtrend, and as a result the market should find the downtrend to be the easier route, and as a result I am much more confident in that particular trade. In the meantime though, short-term selling opportunities could abound.
