The EUR/USD pair fell initially during the session on Monday, but as you can see we bounced enough to start closing out the day at roughly 1.36 again. This area is a bit of a magnet for price as that is essentially “fair value”, being right in the middle of the consolidation area that the market has been working with. Because of this, I am on the sidelines in this pair, and don’t think that it’s quite worth being bothered with at the moment. In fact, I think most of the trading this week will involve the British pound, but I also think that this market could be used as a little bit of a barometer, as it could show overall Euro strength or weakness.
Unfortunately, we are essentially in “no man’s land.”
I think that we are essentially in “no man’s land”, as we are right in the middle of the consolidation area. Because of that, it’s essentially a 50-50 trade that you would be getting involved in. I would much prefer to be buying this market down at the 1.35 level on signs of support, for selling at the 1.37 level on signs of resistance. Until we find yourselves at one extreme or the other of the consolidation area, this is a market that I simply will not be risking any money in. You can see that the action has been very choppy to say the least, and quite frankly isn’t worth the risk to me.
However, if I find that this market is falling, I will not hesitate to short the EUR/GBP pair as it has broken through support recently. The breaking below of the 0.80 handle is without a doubt significant enough to pique my interest, and I believe that we could see this market heading down too much lower levels given enough time. We ultimately will have to see some type of impulsive candle in order to get involved in my estimation, and right now they’re just doesn’t seem to be anything in this market that’s worth being bothered with.
