The EUR/USD pair fell significantly during the Thursday session as the 1.3250 level finally gave way. The breakdown of course was significant, but we didn't stop the 1.3150 level, which I considered to be the bottom of the "zone" of support in this general vicinity. It is because of this, that I see that we have a fairly simple set up for the Friday session.
While I firmly believe that the Euro will continue higher against the Dollar over the longer term, I think that a pullback is not only in the works, but necessary. Because of this, I believe that selling a break of the lows from the Thursday session is how I will be trading this pair. If we get that, I believe that the 1.30 level will be tested.
1.30 is vital
The 1.30 level looks to be very important to the long-term uptrend, and will be at the point where they decide which direction this pair is going to go for the longer-term. Because of this, I fully expect the fall to produce an excellent buying opportunity over the next couple of sessions, and this is what I am essentially hoping for.
Remember, most of the selloff was predicated upon the idea of choice words by a couple members of the ECB. They essentially said that the Euro was weighing on the economy of the region, as it was valued a bit too high. However, they have not actually done anything, and as a result it looks more like a knee-jerk reaction than anything that is sustainable.
Look at in this market, I believe that we will find ourselves bouncing around between 1.30 and 1.37 for the rest of the year, and I will play it as such. However, if the 1.30 level gets broken to the downside, we would have to assume that we are making a run back down to the 1.25 level before it's all said and done. Because of this, although I am shorting this market on a break of the Thursday lows, I am more interested in what's going on down at 1.30 than some trade in the short term.