The EUR/USD pair initially fell during the course of the day on Monday, but found enough support below to turn things back around and form a hammer. Because of this, it looks as if the market is going to try to go higher, and I believe that a break above the top of the trading range for the Monday session is probably reason enough to start going long. Once this happens, I feel that the market should then head towards the 1.15 level again. With that being the case, I am bullish overall once we can get going.
The shape of the hammer is of course very bullish in and of itself, and I think that we have now seen a significant enough of a pullback to warrant markets feeling comfortable jumping back in. I believe that the market will continue to go higher and perhaps try to even break above the 1.15 handle. However, I recognize that the significant resistance will be difficult to get above.
Buying pullbacks
I believe going forward it is likely that we will get pullbacks from time to time. Those pullbacks should offer buying opportunities and perceived as value in the Euro. Once we get above the 1.15 level, then we really start to see the markets go much higher. It is possible that the recent spike that we have seen in this market may have cleared out quite a bit of the sell orders, and now we’re going to test to see whether or not there is still enough resistance to keep this market lower.
Looking forward, the market should continue to be volatile regardless, especially considering that the liquidity comes back from vacation as the markets wake back up. Ultimately, I think we do break out to the upside but it is going to take quite a bit of time. After all, this would essentially be what I consider a trend change, and those are never quick and easy to accomplish.
