Euro carving out new range
The Euro initially tried to rally during the day on Monday, after initially gapping higher. However, by the time the Americans came on board we had already seen the market roll over a bit and show signs of exhaustion. With that being the case, it’s very likely that we are going to stay down in these general levels, but what is that mean in the end?
The new possible range
The possible range that we see being carved out as something that’s worth paying attention to. After all, the 1.12 level above has previously been important support, so now at this point it should start to show signs of resistance. After all, it is an area where we should see quite a bit of “market memory.” Ultimately, if we were to break above the 1.12 level that will change what I see as a new possible trading range.
To the downside, the 1.10 level underneath should be crucial as it is a large, round, psychologically significant figure. In the past, the 1.10 level has offered quite a bit of reaction in the market, so one would have to assume that should continue to be the case.
After breaking below the 1.12 level, it looks as if we are looking for a new range to trade back and forth. The pair does tend to go back and forth, and as a result it makes sense that we are simply looking for new place to go back and forth. This is the norm for this pair, and therefore there’s no reason to think that we are going to do any different in the near term.
The previous range
If we were to break above the 1.1250 level, then we could go back into the previous consolidation area. That would have a support level I.12, with a massive resistance barrier above at the 1.15 level. However, we have seen a lot of bearish pressure as of late, and when you look at the previous consolidation area, you can see that the 1.12 level was tested repeatedly before breaking down. While this could happen, we need some type of reason to jump back into that area. Perhaps some type of a dovish statement coming out of the Federal Reserve, or maybe even the ECB sounding a bit less dovish. At this point that doesn’t look to be very likely.
The main take away
The main take away from the analysis is that we are simply getting ready to do more of the same, but at lower levels. The Euro should be traded against the US dollar in short bursts, and not necessarily from a longer-term standpoint. That doesn’t mean that the bursts are going to be as quick as you want them to be, but they do tend to move between these major levels. At this point, it looks as if we will drift a bit lower, reaching towards 1.10 level to attempt figure whether the buyers are going to show up. It is very likely that they will, so at this point it’s slightly bearish, but just for the time being. This is the domain of day traders, and should continue to be.
Other related news
Australian dollar fails to hang onto gains against Canadian dollar
by Kate Leaman | 20 May 2019
British pound trying to find a bottom
by Kate Leaman | 20 May 2019
US dollar testing major resistance against Canadian dollar
by Kate Leaman | 17 May 2019