The EUR/USD pair recently broke higher during the session on Friday, clearing the 1.12 level. This is an area where I had anticipated seeing quite a bit of resistance, and quite frankly that’s exactly what we got. We ended up turning around, and forming a shooting star. With that, it looks as if the market is ready to pull back from here and perhaps look for support. I believe that the market will find plenty of support near the 1.10 level, as it was previously so resistive. On top of that, it is also a nice, round, psychologically significant number.
Looking at the chart, you can see that the 100 day exponential moving average is right here, so that of course could come into play as well. Longer-term traders like this moving average, and I believe that some of them are starting to step in and sell the Euro in general. You can see this in several different currency pairs, not just this one.
Pullback
I believe that a pullback coming, but ultimately I think there’s plenty of support near the 1.10 level, which is an area that was so resistive. I believe that the longer-term downtrend is still in effect, and you also have to notice that the 38.2% Fibonacci retracement level is there as well, from the fall that started at 1.2560 or so.
I think that there’s plenty of resistance just above, probably heading all the way to the 1.15 level, so it’s more likely that we pullback than go higher. In fact, I’m not willing to buy this pair until we break above the 1.15 level, or a pullback to find some type of supportive candle below. Don’t really want to fight the overall trend, although I recognize that a complete meltdown is very unlikely at this point in time. Will have to wait and see, but I think this is a market that’s ready to start falling short-term.
Click on picture to enlarge
