The EUR/USD pair tried to break out during the day on Tuesday, but as you can see fell quite a bit of resistance at the 1.30 handle. That level of course has been resistive lately, and the fact that this market failed at that area and ended up turning this daily candle into a shooting star suggests that we are going to go lower. If we break the bottom of this candle, I’m not willing to start selling yet though, because I believe that this is more or less a continuation of consolidation area.
On the other hand, if we managed to break down below the 1.29 level, I would be a seller at that point as I think the markets could continue down towards the 1.28 handle, which has been my longer-term target to begin with. Getting below that area will be fairly difficult, but ultimately that’s where the real battle will be.
More risk to the upside than down at the moment.
At this moment in time, I believe that the risk to the upside is probably a bit greater than downside in the EUR/USD pair. Don’t get me wrong, I’m not looking to start buying and holding onto Euros, just that I believe the markets a bit oversold, and we are trying to bounce from here. Having said that though, I think that even if we do break out in above the 1.30 handle, we are not going to go any farther than 1.3250 level.
The shape of the candle for the session on Tuesday does suggest that we are going to struggle to go higher though, so quite frankly I think that short-term options players will probably continue to throw the market back and forth in a very tight range during the day. It is not until we get well above the 1.3250 level that I would be willing to buy this pair and hold onto it, but having said that I would be willing to short this market massively if we break down below the 1.28 handle.
