The EUR/USD pair initially fell during the course of the day on Tuesday, but as you can see that the buyers stepped in below the 1.26 level in order to push the market higher. We presently said just below the 1.27 level, an area that has been significant resistance lately. With that, I feel this market could very easily go to the 1.28 handle on a break out, binds at that point in time I would expect much more significant resistance to enter the fray.
We could fall from here of course, but I don’t necessarily like this set up quite yet. Yes, I recognize that this could be consolidation, but at the end of the day I feel that this market needs a little bit of a bounce as it has been so bearish. On top of that, the fact that we bounced from the 1.25 level is just about perfect as far as I can see, and the bounce up to the 1.28 level would be a 300 pip pullback in order to build up enough momentum to break back down.
Don’t fight the trend.
I see no way you can fight the trend, and the area above the 1.28 level extends resistance all the way to the 1.30 handle. With that, the market looks as if it could be ready to sell off, as the area should have quite a bit of order flow in the realm of selling. I think that the area is far too busy to get sliced through easily, and as a result I think this is probably one of the easiest trades to take if you can be patient enough to wait for the setup.
I still believe that due to the longer-term charts, that this market is going to drop all the way to the 1.20 handle, an area that lines up quite nicely on the weekly chart. That being said, it’s only a matter of time before we break down below 1.25, and as a result I remain very bearish. The only way that I would start buying as if we had a daily close well above the 1.30 handle.
