The EUR/USD pair had a relatively volatile session for the day on Tuesday, testing the 1.36 level ultimately but finding it supportive enough to keep the market afloat. With that, I feel that the market should continue to find buyers in this general area for the short term, but ultimately I feel that the market will continue to drift lower. After all, the 1.36 level looks a bit minor in my opinion, certainly in relation to the 1.35 handle, which shows quite a bit more importance on the longer-term charts.
Looking at this candle, there really is in a whole lot to read into it, as it is somewhat supportive, but really not overly impressive. On top of that, I see the 1.37 level to be resistive above, so I don’t think that this market has too much room to move in the short term.
Summer range trying to be formed.
I feel that ultimately we are trying to form some type of summer range, but probably have another week or two of movement had of the European Central Bank meeting. Once we understand with the ECB is going to do, there will be much more clarity and the Euro overall, and most traders will probably be going on holiday at that point in order to take advantage of the summertime, and not be bothered with the financial markets.
In that environment, I believe that we will form a range, and short-term trading will continue to be the way to go. That being the case, I look at the potential consolidation area as being between 1.35 and 1.37, or 1.35 and 1.40, depending on how much uncertainty there is. There of course is the possibility of a combination of those numbers working out, but I think those are the three most important levels for the next couple of months.
With that in mind, I believe that short-term trading will continue, and the lack of motion may be what we see. I would anticipate that any trade that you are involved in should probably be based off of the 15 minute chart, and less to be short-term gains or losses.
