The Euro has rallied a bit during the course of the trading session on Thursday, only to turn around and show hesitation. By the end of the day, we are forming a bit of a shooting star, and therefore it makes a certain amount of sense that we get a little bit of a pullback. The 1.16 level underneath could be crucial, as it was previously important, but I think at this point you need to pay very close attention to whether or not we can stay above there. If we cannot, that means that we will continue the overall downtrend and probably go looking towards 1.15 level.
That being said, it looks to me as if the market is likely to continue seeing upward pressure, sending the market towards the 50 day EMA. We may get a short-term pullback, but this will come down to what happens with the US dollar overall. After all, the EUR/USD pair tends to be a great proxy for the US Dollar Index and can give us a bit of a “heads up” as to how the US dollar is going to behave against multiple currencies.
Breaking above the top of the candlestick would of course be a very bullish sign as it would negate a shooting star, but I think that the one thing that you will probably see here more than anything else is a lack of real wherewithal when it comes to the Euro. After all, the European Union continues to underperform, so it does make a certain amount of sense that the US dollar will at least hang tough here. I do not like this pair, and I almost never like to trade it. However, this is a market that is a great indicator for US dollar strength or weakness, so therefore I will use this chart as a way to determine how to play the US dollar. I think this continues to be a very noisy situation, but ultimately this is a market that continues to cause short-term opportunities, but still works out to be a better indicator than anything else. The market continues to be noisy, and that is something that you need to keep in mind, even if you are only trading short-term charts with small positions.
