- The EUR/USD rallied initially during the trading session on Thursday but gave back quite a bit of the gain if it looks like we are struggling to get above the 1.04 level for anything sustainable.
- It should be noted that there is probably resistance all the way to the 1.05 level, and it does suggest that perhaps we have a fight on our hands.
- At this point, you can even make an argument for bullish black that has not quite kicked off yet, but you also could just as easily say that we are trying to form some type of rectangle, perhaps a rectangle top.
The shape of the candlestick is of course a shooting star, but you need to keep in mind that it was Thanksgiving in the United States, so a certain amount of liquidity would have been missing from the market. This is especially true in the second half of the day, so therefore it’s likely that you can only read so much in the candlestick. It’s also worth noting that we are right there at the 200-Day EMA, which of course attracts a lot of different algorithm systems and different types of traders.
Pair Looks to Recover
If we do pull back, the 1.0250 level could be a support level, so that is of course worth paying attention to. If we were to break down below there, then I would anticipate that the Euro could drop to the 50-Day EMA, perhaps even down to the parity level, an area that would attract a lot of attention. Anything below parity cuts in this market plunging, but one would have to think that has something to do with a major “risk off” type of event or announcement that has people freaked out. It is worth noting that Friday will be rather thin, at least in the North American timeframe, so we may have very little happen over the next 24 hours.
When I look at this chart, it looks like it is trying to recover quite nicely, but we still have a lot of things to chew through, not the least of which will be the fact that the European Union has energy concerns right along with inflation concerns. It may have the ECB forced to tighten, but at the same time economic activity in the European Union may grind to a halt.
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