The EUR/USD pair shot higher during the session on Monday, testing the 1.13 level during the day. That being the case, the market looks very bullish all of a sudden, because the candle is so strong. This bullish candle suggests that we are going to continue to try to break higher, and we believe that the 1.14 level is the significant beginning of a large barrier. The area above 1.14 will more than likely extend all the way to the 1.15 level. I believe that the 1.15 level is important enough to consider the market to have changed trends if we get above there.
A break above that level probably gives us a longer-term buy-and-hold type of opportunity. I do think that the Euro will break out above that level given enough time but I also recognize that it isn’t going to be easy. After all, the Federal Reserve looks very likely to raise interest rates sometime this year, but the market is starting to believe that it is only going to happen once. Because of that, the interest-rate differential won’t be wide enough to continue to pushes market lower over the longer term.
Bullish momentum
I believe that eventually the momentum will be enough to break out, and that every time we pullback it will simply offer buyers an opportunity to pick up the Euro “on the cheap.” It’s very difficult to imagine this market breaking down at this point, although there will certainly be headlines that make the markets nervous. Ultimately, I believe that we would have to break down below the 1.09 level in order to start selling again, something that looks rather difficult.
All things being equal, I believe that short-term traders will continue to benefit from the upward momentum, but long-term traders will find it a bit frustrating. If you are a longer-term trader, you have to be able to hang on through the volatility in order to take advantage of this market. Ultimately, I believe that we head towards the 1.18 level after we break out to the 1.15 level given enough time.
