EUR/USD
The EUR/USD pair had a positive session on Tuesday, using the 1.09 level as support. We are still consolidating though, and I think that this market is susceptible to short-term pullbacks. I believe short-term traders will come back into the fold though, and start buying as the real target seems to be the 1.10 level above. The gap from last week of course is still very present on the chart, so we could drop down to the 1.0750 level without violating any bullish principles. I don’t look for an explosion to the upside, I just believe that we are going to continue to see an upward grind. Based upon the candle from the Tuesday session, I suspect that we will probably reach 1.10 level above and then pull back.
GBP/USD
The British pound continues to show signs of strength as we are above the 1.29 level again. Tuesday was positive, and quite frankly it’s almost and engulfing candle stick and this of course is a very bullish sign. I believe that it’s only a matter of time before the British pound reaches towards the 1.30 level, and then the 1.3450 level above which is the top of the most recent consolidation. I don’t have any interest in shorting this market and believe that if we can stay above the 1.2750 level below, the only thing you can do is buy. I look at short-term pullbacks as opportunities to take advantage of value in a pair that has been undervalued for quite some time. I don’t know if we can break above the 1.3450 level anytime the summer, but I certainly think we are going to try.
If we did breakdown and close on a daily chart below the 1.2750 level, I would have to rethink my entire position, but I don’t see that happening based upon the last week or so of trading.
