Euro Rallies Against Dollar to Start the Week
The Euro rallied to kick off the trading week on Monday, as the round figure has held. This is a very bullish sign, especially considering how we had sold off so drastically during Friday trading. As we have been trading over the last couple of weeks around the 1.12 level, and now we need to pay attention as to whether or not this area can hold. So far, so good.
The Importance of Round Numbers
The Euro against the US dollar is one of the more technical trading pair is out there. At this point, it looks very likely that this level could hold in the short term, the question is whether or not we can hold for the longer-term. We recognize that the market tends to bounce around between these large numbers, so ultimately one should take note of these levels. You can see that we have reacted quite reliably at the 1.11 level as well. As so many large institutions scalp this market, it makes sense that a lot of money needs the flow in these areas.
50 day EMA There for the Taking
The 50 day EMA sits just above current trading, but it looks as if we could slice through it. The question at this point is whether or not we can close above there on the daily chart. If we do, then it would be another bullish sign as technical traders would take note of this. Beyond that, we have the 1.1250 level which is the top of the range overall, and if we can break above there, then the Euro would more than likely go looking towards the 1.1350 level and possibly the 1.1450 level after that.
Support Area Looks Strong
The 61.8% Fibonacci retracement level is just below the 1.12 level, so that’s another reason to think that the support could hold. At this point in time, it looks as if short-term pullbacks will continue to find reasons to bounce but if we were to break down below the 61.8% Fibonacci retracement level, then the market could break down rather significantly. With that in mind, pay close attention to how we close.
Trade Action Expected to be Lively
The market has fallen rather hard, but this is a market that seems to be forming some type of major bottom, and that, of course, takes quite a bit of action and a lot of momentum building. At this point, the market will continue to be very noisy, as this would be a major trend change. Trend changes are never a clean and easy affair, so don’t be surprised at all to see a lot of violent action in a back-and-forth manner.
If you look at the overall pattern that we formed recently, you can make an argument that we have formed a major W pattern. That, of course, is a bullish sign, so the fact that we have also made a “higher high” suggests that the buyers are starting to step up. There are also signs that the Federal Reserve is looking to loosen its monetary policy, so by the very mechanics of the Forex market, this pair should rise.