The EUR/USD pair went back and forth during the trading session on Thursday, ultimately forming a somewhat neutral candle. This is a good sign, as it appears that the 1.22 level has offered support. If we can break above the top of the candle for the session, extensively the 1.23 level, I think that the market will then rally towards the 1.24 handle and beyond. Underneath, if we break down below the 1.21 handle, I think we find even more support at the uptrend line. That being said, I’m a seller below 1.20, but I doubt we get there. The 1.21 level was massive resistance in the past, so it should be massive support in the future. I still believe that the EUR/USD pair should go to the 1.32 handle based upon the longer-term charts, so by being patient, you should be able to pick up significant value.
The British pound initially rally during the trading session on Thursday, slicing above the 1.40 level. The Bank of England was a bit more hawkish than anticipated in its language, but we have seen a complete turnaround since then, forming a shooting star that show signs of resistance at the 1.40 level. Because of this, we could breakdown from here and go looking towards the 1.3650 level, an area that was massive resistance in the past. I would anticipate a lot of support in that area and be more than willing to take advantage of value and a bounce from that level. Short-term traders may be sellers, if we can break down below the bottom of the hammer from the Tuesday session. I expect volatility to continue, but longer-term I still believe that we will see buyers return.