The EUR/USD pair initially took off to the upside during the session on Thursday, but found quite a bit of resistance at the 1.14 level. Because of this, we ended up turning back around and formed a shooting star. The shooting star of course is a very negative sign, but I believe there’s probably a bit more going on than meets the eye. After all, today is Nonfarm Payroll Friday, and that of course brings in a lot of volatility to the marketplace. Think of it this way: it’s not real difficult to imagine taking profit in this particular market if you are already long from the 1.10 breakout. You might as well take the profits that you know where there instead of risking the absolute potential insanity on a Nonfarm Payroll Friday.
A little bit of breathing room
I believe that the market is getting ready to pull back slightly during the session, but quite frankly it’s only a matter of time before the buyers step back into the marketplace. After all, the move above the 1.10 level was significant. On top of that, the market ended up breaking out with extreme momentum, so it shows that there was in fact quite a bit of confidence in the move.
I believe that we are currently seeing longer-term traders start to buy the Euro, and as you look at the chart you can see that the last couple of lows were higher than the one before. Because of this, I think this is a short-term selling move that is based more upon trying to get out of the way of the announcement more than anything else.
I am looking for a selloff in this market, and signs of support that I can take advantage of. I look at pullbacks as potential “value” in the Euro, and it is not until we get well below the 1.10 level that I would be concerned about what looks to be a potential attempt at a trend change. Remember, trend changes are not sudden events, and they most certainly are not easy to deal with. Patience will be needed.
