EUR/USD
The EUR/USD pair fell significantly during the course of the session on Monday, in reaction to the European Central Bank President Mario Draghi suggesting that the ECB was ready to do whatever it took to liquefy the markets. After all, there is a lot of concern that the bank stocks in the European Union are getting sold off rather drastically, and that could jeopardize the already fragile recovery in Europe, so it’s very likely that the ECB will do something.
Having said that, I see quite a bit of support at the 1.1050 level, and as a result I think that we could get buyers in that area. A supportive candle would be reason enough to start buying, and I do think that we will have a lot of volatility because not only does the ECB look likely to do something, the Federal Reserve has already suggested that it can’t raise interest rates anytime soon. One thing you can count on is that the volatility should continue.
GBP/USD
The GBP/USD pair fell significantly during the day as well, but still managed to find the 1.44 level to be somewhat supportive. Ultimately, we feel that the market should continue to bounce around between the 1.44 level on the bottom, and the 1.46 level on the top. I think this lends itself to short-term trading only, and until we break out of that range it’s almost impossible to imagine trading this market for any real length of time.
I think that the volatility will continue, and quite frankly if you can jump down to the 15-minute chart you could possibly have quite a bit of trading possibilities, but you will have to be very nimble to do so. For myself, I prefer to trade longer-term than that, so I will be waiting until we break out of the consolidation zone.
