The EUR/USD pair found support during the day on Friday near the 1.33508 handle, and then bounced in order to form a fairly positive candle. We have seen support in this region lately, so it is possible that we continue to bounce a bit. However, I feel that the 1.35 level will be rather significant resistance, so a bounce in here is probably going to be relatively short-lived.
However, there is obviously bullish momentum at the moment. Because of this, I am a bit hesitant to sell, but wouldn’t hesitate to sell on a resistive candle. Some type of shooting star or large red candle would be enough to get me to start selling, as the downtrend would certainly take over again. I believe that the 1.33 level is more important support, so I feel that we should continue going lower given enough time.
“Dead cat” bounce?
I have to ask whether or not this is simply a dead cat bounce, simply because the market has fallen so much. This happened in a relatively short amount of time, and because of that I think that this could simply be a matter of the market needing to bounce after such a massive move in one direction. Nonetheless, I believe that ultimately the Euro is going to continue to have problems for the rest of this month, so I think that short-term rallies will continue to be opportunities to sell the Euro, or more importantly, by the US dollar “on the cheap.” Because of this, I think that it’s only a matter of time for we turn things back around but the next day or 2 could be relatively positive.
If we broke above the 1.3550 level that would be enough to have me thinking that the market is probably going to head to the 1.37 handle, which was the top of the previous consolidation area. The market moving above there is something that I really doubt will happen anytime soon, so I think that we are either falling to the 1.33 handle, or going to the 1.37 handle, the question of course is which one of the scenarios plays out first?
