The EUR/USD pair broke higher during the course of the session on Friday, clearing the 1.08 level. Because of this, I believe that the market is going to try to reach towards the 1.10 handle, but I recognize that there is a significant barrier of resistance in that area. Ultimately, I do not think that we will be able to get above it, and with this we will more than likely struggle to get above it. With this being the case, I am short-term positive, but ultimately I believe we will stay within the consolidation area between 1.05 on the bottom, and 1.10 on the top. Ultimately, this is a market that will feature a lot of volatility in my opinion.
I feel much more at ease selling this market than buying it. However, I recognize that the next day or two will more than likely feature buying pressure. I think if we can get some type of resistive candle close to the 1.10 level, it would be an excellent selling opportunity in what is a market that is going to feature the European Union and its problems.
Back and forth
I believe that this market will continue to go back and forth in the meantime, and as a result you might be a little bit more comfortable playing the option markets. With this, you will have to be able to withstand quite a bit of volatility if you want to play this market in the spot Forex realm. It’s probably only a matter time before we make a significant move, but until then it’s going to take quite a bit of wherewithal to stay involved.
Once we do get outside of this range, we should see a longer-term move that can be taken advantage of by both short and long-term traders. In fact, I believe that whatever direction we break out of this consolidation could be a harbinger of where the next 500 pips appear.
