During the session on Thursday, which of course is also Christmas Eve, there’s a good chance that there will be almost nothing in the way of liquidity. Because of this, it is probably one of the riskiest times of the year to trade, simply because a large order coming into the market can move it much more rapidly and much farther than might otherwise to sell on a typical day. Having said that though, I recognize that some of you will probably still be in the market.
Because of this, I look at the market in an overall sense, and recognize that we are essentially consolidating. For the Wednesday session, I had suggested that there was quite a bit of resistance above, and we did in fact break down a bit during the day. However, we also bounced in order to form a somewhat supportive candle. This is typical of holiday trading, as there is no real conviction between any move, and quite frankly a lot of the noise will be due to the fact that traders are trying to square up positions before the holidays.
A Multitude of Indications
The reason I feel that this market may drift lower overall is because of a multitude of indications all in one spot. I believe that the 1.10 level is becoming more and more bearish, and of course resistive. When you look at this chart, you can see that I have a yellow ellipse at that area, because I think it is the most important part of the chart right now.
Looking at that area, we have a large, round number in the form of 1.10, but we also have the 50% Fibonacci retracement level. That of course attract a lot of attention typically, and as a result that’s at least 2 reasons to think that the sellers will continue to enter the market in that area. Adding to the bearish pressure is the fact that there is the 100 day exponential moving average just below, so I believe that anytime this market rallies we could very well end up selling again. However, I recognize that overall we are essentially consolidating between the 1.08 level on the bottom, and the 1.1050 level on the top. I think we continue to consolidate, but essentially with a slightly bearish attitude.
