The EUR/USD pair fell during the session on Thursday, testing the 1.37 region. That area offered support, but it does look like the markets going to try to break through and below that specific area. This is an area that should offer support though, so I am actually on the sidelines waiting to what happens. However, a break down below that level on a daily close would be enough to get me to start selling at that point in time, as the Euro would certainly be starting to weaken.
A supportive candle in that general vicinity could be a buying opportunity though, but I would suggest that the buying opportunity would be more of the short-term variety, as the market has been so choppy. I believe that the 1.3950 level will keep a little bit of a ceiling in this market, and as a result a buy signal in this general vicinity would be good for about 200 pips or so, and then I would be out of the market again.
The 1.40 level matters to me.
The 1.40 level matters quite a bit to me ultimately, as I believe it is a massive resistance area. If we get a daily close above that level I think that this market should continue to go much higher, but it will be more than likely a longer-term affair. That level features a downtrend line from the monthly timeframe, which of course can be traced all the way back to the beginning of the financial crisis. A break above there would in fact be very bullish as the Euro has gradually gone lower over the longer term.
However, if we did manage to break down below the 1.37 level, I feel that the breakdown would probably lead to the 1.35 level in the short-term, albeit with a massively choppy move. It doesn’t really matter what the market does right now, I believe that ultimately is going to be choppy in either direction. With that, I am cautiously watching this pair, but not ready to put money to work quite yet.
