Keep in mind that this pair has been in somewhat of a channel, so it’ll be interesting to see if that plays out.
- The EUR/USD tried to rally during the trading session on Thursday, breaking above the highs of the last couple of sessions.
- However, the market gave up some of those gains rather quickly, therefore it looks as if we are going to continue to struggle in general.
- The 50-Day EMA sets just underneath, near the 1.07 level. That could offer significant support, and therefore it’s likely that we could see the potential trendline hold as well.
If we do break down below the 50-Day EMA, then we could go looking to the 200-Day EMA underneath, which is closer to the 1.05 level. That’s a large, round, psychologically significant figure that a lot of people will be paying attention to, and therefore I think it does make a certain amount of sense that we would see some action. Breaking down below that level could then open the possibility of a move down to the 1.03 level, maybe even down to the parity level over the longer term.
The market will continue to be Very Difficult
Keep in mind that this pair has been in somewhat of a channel, so it’ll be interesting to see if that plays out. Breaking above the top of the candlestick for the trading session on Thursday opens the possibility that we go back toward the top of the channel, which is closer to the 1.10 level above. That of course is a large, round, psychologically significant figure, and a lot of people will be paying close attention to it. Breaking above that allows the market to go much higher, but at this point, we would need to see some type of Herculean effort to make that happen. After all, the recent selloff has been rather brutal, and though still typically happens in a vacuum.
Either way, as we head into the weekend will be interesting to see where people choose to put their money, because where they are willing to hold it over the weekend typically tells you quite a bit. The market will continue to be very difficult, so, therefore, keep in mind that you need to be cautious with your position size, mainly since we have so much uncertainty out there and probably will continue to see that be a major problem. At this point, I think we have a situation where more back-and-forth is likely than anything else in the short term.
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