The Euro has initially spiked during the trading session on Friday, testing the 1.12 level, an area that of course is rather crucial. That being the case though, we also have the downtrend line from the channel that comes into play, so it’s very likely that we continue to see resistance in this general vicinity. However, if the EUR/USD pair can close on a daily chart above the 1.1250 level, it’s likely that we will continue to go higher, perhaps reaching towards the 1.15 level over the longer term.
Alternately, if the market breaks back down then it is a simple return to consolidation, something that would be typical of this pair as it is very choppy to say the least. The 50 day EMA is starting to turn a bit higher, and we are currently sitting on top of the 200 day EMA. With this, it’s very likely that we continue to see a lot of back and forth and confusion, but ultimately that is the nature of this pair under most circumstances. A simple consolidation of course makes quite a bit of sense, as the downtrend has been in effect for a couple of years. That being said, there is obvious resistance above that being broken would of course attract a lot of attention by traders around the world. With this, the EUR/USD pair is likely to continue the same action that we have seen time and time again, and it is also important to notice that there have been “higher highs” on the way down in this channel. So far, it looks as if the market is simply settled in a region between the 1.12 level above and the 1.10 level underneath. Ultimately, this is just more of the same so range bound trading probably works out the best for those willing to be patient enough to take advantage of the scenario.
Alternately, if the market breaks back down then it is a simple return to consolidation, something that would be typical of this pair as it is very choppy to say the least. The 50 day EMA is starting to turn a bit higher, and we are currently sitting on top of the 200 day EMA. With this, it’s very likely that we continue to see a lot of back and forth and confusion, but ultimately that is the nature of this pair under most circumstances. A simple consolidation of course makes quite a bit of sense, as the downtrend has been in effect for a couple of years. That being said, there is obvious resistance above that being broken would of course attract a lot of attention by traders around the world. With this, the EUR/USD pair is likely to continue the same action that we have seen time and time again, and it is also important to notice that there have been “higher highs” on the way down in this channel. So far, it looks as if the market is simply settled in a region between the 1.12 level above and the 1.10 level underneath. Ultimately, this is just more of the same so range bound trading probably works out the best for those willing to be patient enough to take advantage of the scenario.