Probably we will see selling pressure on short-term rallies that show signs of exhaustion, or a breakdown of these couple of candlesticks.
The Euro has gone back and forth during the course of the trading session on Thursday as we continue to trade in a falling wedge, which of course is actually a bullish signal. That being said, it is worth noting that we are closing towards the bottom of the candlestick for the session, so that causes some questions to be asked as well. With that in mind, I think this is a market that will ultimately find some type of certainty that allows it to either break out to the upside or continue to slide lower.
If we can clear the top of the candlestick for Thursday, then I think that is a very good sign that we are probably going to go quite a bit higher. At that point, I would anticipate a move towards the 200 day EMA. The 200 day EMA of course is a very important technical signal that people pay attention to, and it makes quite a bit of sense that we would see interest in this market. I would anticipate that there could be a bit of resistance, especially if the 50 day EMA does in fact cross below the 200 day EMA, forming the so-called “death cross.” The “death cross” attracts a lot of attention and people will be very bearish from that reasoning.
On the other hand, if we were to break down below the last couple of candlesticks, then it opens up the possibility of a move down to the 1.17 level, and then possibly down to the 1.16 level which is a large, round, psychologically significant figure that has already proven itself to be important in the past. Because of this, I think what we are about to see is an attempt to break down even further if we get down there; it also should be noted that the market has been struggling for some time.
Even after the ECB meeting, we had seen an attempt to rally this pair, but you can see how it turned around to fall and show signs of weakness right away. It is more likely than not that we will see selling pressure on short-term rallies that show signs of exhaustion or of course a breakdown of these couple of candlesticks.