The EUR/USD pair fell hard during the session on Friday, slamming into the 1.3750 support level. That being the case, the market of course looks very bearish but we now find yourselves testing support. With that, I am a bit hesitant to get involved, but recognize that if we can get below the 1.37 handle, that the market should go much lower, probably the 1.35 handle originally.
Of course, you have to keep in mind that the European Central Bank is going to play a major role in this market, as they have suggested that they could take action in June if the Euro continues to gain in strength. When they talk about the Euro gain in strength, they are speaking specifically of this market. The 1.40 level of course has been resistance recently, and it’s also a place where the ECB looks to stymie growth in the value of the Euro.
Testing a major area.
In my opinion, we are testing a major support area. I think this area as mentioned above extends all the way down to the 1.37 level, and as a result I can’t short this market until we break down below it. However, I recognize that the market closed at the very lows of the candle, so what I think is that any significant bounce from here is probably going to end up being a shorting opportunity before it’s all said and done. A resistive candle above after a bounce is a decent sell signal to me as well, and with that I am actually sitting on the sidelines when it comes of this market. I have to admit that I was a bit surprised by the way the market just fell apart after the ECB announcement, as the Euro tends to have a mind of its own over time. The market cannot be bought as far as I can see at the moment, and as a result I am in a bearish mode when it comes in the Euro. This is not only true in this particular market, but pretty much anything that the Euro is traded against.
