EUR/USD
The EUR/USD pair broke down below the vital 1.21 level during the trading session on Friday, but as you can see turned around to form a very strong looking hammer at a crucial level. Now that we have formed this hammer, I suspect that a break above the top of the range for the day should send this market looking towards the 1.2350 level again. At the very least, I think that the market should continue to be very interesting as we are respecting an area that was very important resistance previously, so I think this is a perfect area to see buyers coming back in and pick up value. If we were to break down below the bottom of the hammer for the session on Friday, then the market could unwind rather drastically. However, I think that the market should be looked at from the longer-term standpoint, and that suggests that we are very much in an uptrend still, despite we have seen over the last couple of weeks.
GBP/USD
The British pound has broken down during the trading session on Friday, reaching below the 1.38 handle. However, we are starting to approach an area that should be supportive based upon several different factors. There is an uptrend line just below, there is massive support at the 1.3650 level also, and of course the 200-day moving average hanging about the uptrend line. I think that buyers will continue to look in this general vicinity to pick up a bit of value. If we break down below the 200-day moving average, pictured in black on the chart, then I think you could start selling. Otherwise, I feel that it is only a matter of time before the value hunters come back.
