The EUR/USD pair fell during the Tuesday session, as it appears the 1.10 level continues to offer far too much in the way of resistance. This area has been massively resistive, as the market has shown time and time again. It is of course a large, round, psychologically significant number, but it also is the 50% Fibonacci retracement level from the recent collapse of this market. Beyond that, we also have the 100 day exponential moving average in the neighborhood, which of course will offer some type of dynamic resistance. After all, it is one of the favored moving averages by longer-term traders and it tends to attract large money.
I believe that the market is going to take its cues from the moving average, as it tends to flatten out of the last several sessions. The flat moving average signifies that perhaps we are going to continue the consolidation that we’ve seen recently, which I have as being between the 1.08 level on the bottom, and the 1.1050 level on the top.
Wrong Time of Year
This is the wrong time of year to expect some type of major movement in this market or any other one for that matter, and as a result it does not surprise me at all that we gave back some of the losses during the day. Ultimately though, I think that this market is probably going to drift lower from here, but not necessarily in an easy manner. Because of this, I think that only the short-term traders will be involved, and quite frankly I would prefer to be involved somewhere closer to the top or bottom of the consolidation area as opposed to the middle of it which I always find to be a bit difficult.
If we did break above the 1.1050 level, I feel that the market could go much higher, probably reaching towards the 1.14 handle over the longer term. This could happen, but it’s not going to happen today.
