The EUR/USD pair fell during the trading session on Thursday, as we continue to see quite a bit of volatility. A breakdown below the shooting star from the Wednesday session was the first signal that we are probably going to continue to drift towards the 1.17 level. While not looking for some type of melt down, I believe that we are going down to that level to go looking for support. If we can break down below there, the market then could drift as low as the 1.16 handle, and this would show just how messy and erratic the market can be. After all, we had initially had a nice head and shoulders breakdown, but now we have completely negated that technical analysis. I suspect that the 1.17 level should continue to attract a lot of order flow. If we bounce from the 1.17 handle, the market should then go to the 1.21 level.
The British pound has been very choppy, as we continue to grind sideways overall. The 1.3050 level underneath is the beginning of significant support, that extends down to the 1.30 level. There is an uptrend line that coincides with that level as well, so I believe it’s only a matter of time before we get some type of longer-term bounce. However, in the short term it looks as if we are not ready to go anywhere with certainty, and therefore I think that this pair will continue to be one that short-term traders will probably look to range bound systems to trade back and forth in small increments. If we can break above the 1.3333 handle, then I think we could make some momentum and start to rally significantly, perhaps reaching towards the highs again at the 1.3650 level.