The EUR/USD pair rose during the session on Tuesday, breaking higher and attacking the 1.38 level. I had mentioned this as a short-term buying opportunity, and that the 1.38 level would be the target. This is an area that they feel that there is a lot of resistance at, and because of that it doesn’t surprise me that the market stopped. However, I do think that with the variety of positive signs in this market that we will eventually go higher.
The blue moving average on the chart is the 100 day exponential moving average. As you can see, it offered support when we pulled back to that level, and formed a supportive hammer. On top of that, the bottom of the hammer was at the 61.8% Fibonacci retracement level, which of course is a very common support area. With that being the case, I feel that the market has certainly shown us that it wants to go higher.
Ultimately, the real question is going to be what happens at the 1.3950 level.
Ultimately, I believe that the market is going to go much higher, probably heading to the 1.3950 level. It is at that area that we decide whether or not we are going to break above the downtrend line from the monthly chart, which in my opinion could open up the door to a massive long-term buy-and-hold situation. If that’s the case, the market will certainly be much easier to trade, but right now I believe that we are at least going to try and get to that area. It might take quite a bit of effort back and forth in order to finally break out above that area, and they do not think that the move to that area is going to be easy. It is because of that you need to be very determined in order to hang onto the position. It won’t necessarily be the easiest trade to take, but I certainly see no reason whatsoever to consider shorting this market, at least until we break down below the hammer from last week.
