EUR/USD Touches Off the 1.05 Level - 12 March 2015

The EUR/USD pair broke down again on Wednesday, but this time tested the 1.05 support level. This of course is a large, round, psychologically significant number, so it does not surprise me that the buyers stepped in. In fact, I would not be surprise at all to see a little bit of a bounce from here, as a lot of the larger traders out there will use round numbers for profit taking and order entry. With this, I believe that the bounce that’s coming should simply be a nice buying opportunity. I don’t anticipate much of a bounce, but I would think that there should be some type of reaction.

I believe that if we break down below the 1.05 level, we almost have to go to parity. At that point. There simply isn’t anything on the longer-term charts, that shows signs of significant support, so with that, I don’t have any scenario in which a willing to buy this market. I think that the 1.10 level above continues to be the ceiling, and that any move towards that area will be sold.

Selling short-term rallies.

Truthfully, I have been selling the EUR/USD pair because of the options market on short-term charts. This is because it affords me the ability to enter the market as often as needed, and with a limited amount of risk. After all, when markets break down like this, they quite often have massive bounces from time to time. This way, I can simply limit my risk and go with the longer-term trend. Ultimately though, I think that longer-term traders continue to hold this pair short, and that it’s not until we get to the parity level that we will see a significant attempt to stabilize the marketplace.

I believe that the sellers will be waiting above, and as a result any short-term rally that shows a sign of weakness I am interested in selling. I think that the 1.120 level will be massively oppressive for the buyers, and as a result I do not anticipate breaking above that level anytime soon.

EURUSD 31215

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.