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I would anticipate more sideways action with a downward tilt than anything else right now
- The EUR/USD currency pair has dipped again during the trading session on Friday, breaking below the 50-Day EMA.
- However, buyers came back in and picked it up yet again, as it sems like no matter what, traders are out there thinking on some type of “soft landing” or economic pickup.
- Traders around the world continue to believe that the Federal Reserve is going to do everything it can to inflate the markets, and that’s probably the fault of the Federal Reserve itself.
Bounce to the 1.08 Level Seems Likely
After all, the Federal Reserve have given out free money for so long that traders just don’t know anything different. That being said, occasionally we get a signal that the Federal Reserve is serious about fighting inflation, but again, I don’t know that I would hold my breath for that. However, a bounce to the 1.08 level does seem likely, as it would be the top of the overall consolidation area. That being said, if we were to see the market break down below the hammer for the Friday session he could open up a move down to the 200-Day moving average. That currently sits at the 1.05 level, an area that of course would attract a lot of attention as it is a large, round, psychologically significant figure. Breaking down below that level then opens up quite a bit of selling pressure, as it would undermine the idea of the Euro being supported.
On the other hand, if we were to break above the 1.08 level, it opens up the possibility of a move all the way to the 1.10 level. The 1.10 level is a large, round, psychologically significant figure, and an area where we would see a lot of market memory and of course psychology come into the picture. Break above that would obviously be a major victory for the Euro, but right now I think we are in the midst of trying to determine whether or not we are in the distribution phase, or if we are simply consolidating on the back of a bigger move to the upside. Right now, I think we are still trying to sort all that out, so I would anticipate more sideways action with a downward tilt than anything else right now. I don’t necessarily like the idea of putting a lot of money in this market, but eventually will get the break that I can jump on.
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