The EUR/USD pair has broken down significantly for several months now. In fact, the descent of the value of the Euro has been surprising to almost all who have been watching it, as the selloff has been absolutely brutal. However, there is the possibility that we are getting close to the end of this trend. There are a couple of signs of support that I am seeing, not the least of which being the fact that we formed a hammer for the session on Monday.
I recognize that we did in fact break down below the 1.20 handle, which of course is a large, round, psychologically significant number. With that, it’s very likely that the market will struggle to fall much farther though, because of the fact that we have sold off so drastically. But even more importantly, I think that there is something bigger going on as we speak.
Major support level being tested
When you look at the major levels on the monthly chart, the 1.20 region is one of the ones that stand out. Because of this, it’s very likely that the marketplace will respect this yet again. In fact, it goes back about 10 years. With that, I am paying attention to this marketplace on the weekly chart in order to find a nice buying opportunity if it presents itself. What I would really like to see is a hammer on the weekly chart and a move back above the zero level, as it in my opinion represent a nice trend change.
Needless to say, it might be a bit of a bumpy ride. But quite frankly I think we are starting to get a little bit absurd at this point time, but I do recognize that if we broke down from here it could be ugly. We could probably see a move to very significantly lower levels on a break below 1.18 or so. However, if I had a dollar for every time I bet against the euro bouncing and it proved to me wrong, I wouldn’t need to trade.
