The EUR/USD pair sold off during the day on Thursday after the markets had too much in the way of headline risk to feel comfortable shorting the US dollar. Alternately though, it looks as if the 1.12 level area is starting to offer support again, so I believe it’s only a matter of time before the buyers get involved. Longer term, I still expect the market to try to reach towards the 1.15 level which was the top of the recent consolidation area that has spanned over 3 years, as it is too simple of a target to ignore. I believe dips continue to offer buying opportunities, and by the time it’s all said and done that’s all Thursday will be. Expect volatility, but I certainly believe the buyers will return sooner rather than later.
As a disclaimer, while I write this we do not have the full election results out of the United Kingdom. However, polls are suggesting that there isn’t going to be too much of a major surprise, and therefore I think we can get back to the business of grinding higher. I like buying pullbacks, and I believe that the 1.2750 level underneath is massively supportive. I also believe that the 1.3050 level above is resistive, and breaking above there would be a very bullish sign and perhaps in this market looking for the 1.3450 level after that. I expect choppy and volatile conditions, but I still expect a general upward bias when it comes to the British pound. Because of this, I believe that buying small positions and simply adding as the trade goes in your favor is probably going to be the most profitable way to trade cable over the next several weeks, if not months. I don’t know if we can break above the 1.3450 level, but I do know that it’s an obvious target on longer-term charts.