EUR/USD
The EUR/USD pair initially fell during the day on Thursday, testing the 1.08 level for support. That area offered support yet again, and as a result we ended up bouncing to form a nice-looking hammer. Part of the problem of course would have been the fact that we had an interest-rate decision coming out of Brussels, and as a result the market were very volatile. Ultimately though, we did bounce enough to break back above the 50 Day Exponential Moving Average on the daily chart, and this suggests that we simply are not ready to break down. However, I don’t see an opportunity to buy either because we are simply stuck at this point.
I believe a lot more of the old “back and forth” type of short trading is going to continue between the 1.08 level on the bottom, and the 1.10 level on the top. Because of this, the only short-term traders will be attracted to this market at the moment.
GBP/USD
The GBP/USD pair initially fell again during the day on Thursday, but found enough support near the 1.4050 level to turn things back around and form a hammer. The hammer of course is a bullish sign but I am not interested in buying this pair because it is far too bearish to even think about going against the grain here. Because of this, I am going to simply wait for this market to rally and show signs of exhaustion to start selling again. I don’t have any scenario in which a willing to buy at this point, but I would be willing to look at a buy signal on the weekly chart. Until I get that, I am simply waiting for the exhaustive candle above in order to take advantage of perceived value in the US dollar. I still believe that the 1.40 level below is the target that the market is aiming for.
