I believe that the market will continue to be very choppy and sideways, but eventually the market should go higher.
The euro has gone back and forth during the trading session on Tuesday as we wait to see what the Federal Reserve has to say late on Wednesday. Ultimately, the market seems as if it is hanging about the 50-day EMA, an indicator that has been important for multiple weeks on end. This being the case, the neutral candlestick does make sense, as we are at an area that a lot of traders would be interested in.
If we break above the top of the candlestick for the trading session on Tuesday, then it could open up a move towards the 1.22 handle, possibly the recent highs. If we could break above there, then the market is likely to go much higher, perhaps reaching towards the 1.25 level. To the downside, if we break down below the lows of the last couple of days, we could go looking towards the 1.20 handle. The 1.20 handle is a large, round, psychologically significant figure that a lot of people will pay close attention to. This is especially true as the 200-day EMA is approaching that level, so it is likely that we would see plenty of buyers in that general vicinity.
I think this is a market that will be making a more significant move sooner or later, but it probably will not happen until we get the announcement from the Federal Reserve. It comes down to whether or not they are going to continue to flood the markets with liquidity, or if they start to talk about “thinking about tapering.” I suspect that they will continue to see a lot of reasons to keep the floodgates open, so that should work against the greenback. Because of this, I believe that the market will continue to be very choppy and sideways, but eventually the market should go higher. The market continues to be very tight and noisy, but we are in an uptrend, so unless something changes quite drastically with the Federal Reserve, I suspect that we will continue to see that overall pressure. Ultimately, I do not have any interest in shorting this market until we get down below the 1.20 handle, because if we do, then it would mark the end of the uptrend from what I can see in this market. That does not look very likely at this point, though.