- The EUR/USD pair went back and forth Friday as we continue to see a lot of noisy behavior.
- The 1.02 level is an area that a lot of people will pay attention to as a magnet for price.
- The euro has been back and forth during the course of the week or so, so I think it’s only a matter of time before we have to break in one direction or the other.
If we break above the 1.03 level, then it’s likely that we go looking to the upside. The 1.04 level is an area that has a lot of “market memory” built into it, and it’s likely that we will see sellers in that area. The 50-day EMA sits just above that area as well, so I think it’s worth paying close attention to ultimately, if we were to reach that area, I think the first signs of exhaustion would be a potential selling opportunity.
Shorting at 1.02
Markets pulling back from that area have a bit of real estate to cover, so I would be more than willing to get short. Ultimately, the 1.02 level could be a target. If we break it down below there, then it’s likely that the euro drops back down to the parity level. Speaking of breaking down, if we slice through the 1.01 level, it’s likely that we go down to the parity level as well.
The parity level is something worth paying close attention to, as it has a lot of psychology attached to it. If we can get a breakdown below the parity level, then a daily close underneath there would confirm a lot of selling pressure. At that point, it’s likely that we could go down to the 0.98 level, maybe even down to the 0.96 level. I do believe that the European Union has a whole host of issues to worry about, most of which the United States does not have to. Because of this, it is likely that we will see downward movement. The market has been sideways for a while, so I do believe that once we get that break out, it could be somewhat volatile and violent. Regardless, I’m much more comfortable going short than trying to buy this pair which looks so negative at the moment.
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