The EUR/USD pair has been going back and forth during the session here on Thursday, showing signs of volatility. However, as we are closing out the session in America, it looks as if we are ready to form a hammer. A break above the top of the hammer should send this market to the upside, perhaps reaching towards the 1.2350 level, and then eventually the 1.25 handle. I believe that the 1.21 level underneath is going to be massive support, based not only upon the previous resistance that we had seen there, but the fact that there is a nice uptrend line that coincides with that level. I believe that the market will continue to extend to the upside, perhaps reaching towards the 1.32 level based upon a break above the top of the bullish flag on the weekly chart that has gotten me so interested in being long of this market.
The British pound has fallen slightly during the trading session on Thursday, reaching towards the 1.37 level, and more importantly, the 1.3650 level underneath. I suspect that there will be some buying pressure between here and there, as it was a scene of massive resistance previously. I think that the market should continue to find interest in that area, and perhaps giving us an opportunity to rally towards the 1.40 level. I think that’s an area that is going to be a target, and I believe that if we can break above there, that will only bring in more buyers.
Even if we do break down below the 1.365 handle, I think that the market has more than enough support at the uptrend line as well. Ultimately, I think that this is a “buy only” market more than anything else, and therefore I’m looking for a bounce or some upward momentum to take advantage of.