The EUR/USD pair fell during most of the session on Friday, but you can see that the 1.2950 level offered enough support to make this pair bounce. The bounce formed a hammer, and of course showed signs of support. The 1.30 level has offered support now that we see this bounce, and it appears that the market is going to enter what I have been referring to as the "upper half" of the larger consolidation area.
This consolidation area is half of the greater consolidation area between 1.32 and the 1.28 levels. That being the case, I believe that this market is now entering this range from 1.30 to the 1.32 handle. The shape of the hammer for the Friday session of course adds to that as well, and as a result a breaking of the top of the candle for the Friday session should send more buyers into the marketplace. In fact, I believe that perhaps we started to see them appear late in the day.
People are forgetting about Europe
The longer the market forgets about the European Union and its issues, the better off it's going to be for the Euro obviously. More importantly, I see the 1.28 level as the beginning of significant support on the longer-term charts, and as a result is going to be very difficult for the markets to break down below it. With that being the case, I think that this market is essentially going to bounce around in this 400 pip range for the summer. Having said that, there are always possible headlines out there ready to move the markets.
I could be wrong, but right now it simply looks like we are ready to go sideways, and that nobody's willing to make any serious bets at this point in time. This is the beginning of the lowest liquidity of the year, and as a result a lot of professional traders simply walk away from the markets. Because of that, the markets could have a very hard time to break out of these substantially confirmed support and resistance levels.
