The EUR/USD pair fell during the bulk of the session on Wednesday, but as you can see we ended up finding a significant amount of support below the 1.3350 level, and bounce far enough to form a hammer. This hammer of course is very good-looking as it is not only a perfect shape, but it is at the very end of a massive move lower. Because of that, it appears that we could get a little bit of a bounce, and quite frankly that wouldn’t be a surprise as we are getting fairly close to the 1.33 handle, an area that I see as massively supportive.
Biggest problem of course is that the 1.35 handle above it should be massively resistive as it was a significant break down at that level. With this, I think that we have a short-term reprieve for the Euro, but ultimately the sellers will come back into the marketplace in that region if we get there, and we could in effect have a “two speed” signal. We might ultimately be able to go along in this market for the short term, and then turn around and sell once we get closer to the 1.35 handle.
Volatility should continue.
With very little out there to move the market in any one definite direction, it’s hard to imagine that we will continue to have very choppy conditions. Even with a massive selloff that we have seen over the last several weeks, you can still see where the market was choppy all the way down. I don’t think of this market’s going to be any different in the near term, and as a result I feel that we will more than likely have short-term trade setups only at this point.
If we did break below the 1.33 handle, I think this pair goes to the 1.30 handle next, but think that is going to take some serious selling pressure in order to achieve that breakdown. As far as buying is concerned, I suppose if we get above the 1.3550 level, I would be forced to start buying and aiming for the 1.37 handle.