EUR/USD
The EUR/USD pair fell a bit at the open on Tuesday, but turned around to form a hammer candle. This suggests that we are going to try to break above the 1.20 level yet again, but I think that the market is starting to run out of momentum. There is a bit of a divergence between price and the MACD indicator, so I think that we may hang about this area, if not pull back. Without a doubt, the easiest trade for me is to buy the market on a break above the top of the shooting star from Friday. However, I think we may struggle a bit so I’m willing to sit on the sidelines until that happens, or we get some type a significant pullback that I can buy based upon value, perhaps back to the 1.1750 region.
GBP/USD
The British pound exploded through the 1.3250 barrier during the day on Tuesday, suggesting that we are going to continue to see bullish pressure. I think short-term pullbacks will be buying opportunities, at least for the time being. The next target that I would have for this pair is the 1.3450 level, and then eventually the 1.35 handle. I see a significant amount of resistance at the 1.35 handle though, so it’s probably going to be difficult to break above it. I think that given enough time, the market may try to clear that area but on the longer-term charts there is a massive gap that I think will keep a bit of a ceiling in the market. In the meantime, I think buying is the only thing that you can do as we are certainly seeing a significant break out in the market. Volatility continues, but certainly the buyers are in control.
