The EUR/USD pair initially tried to rally during the session on Monday, but found the 1.36 area before too resistant, and then fell below it to close at roughly 1.3540 for the day. Because of this, the market does look like it susceptible to selling off a little bit, but I think that the area below should offer enough support to keep it from falling significantly. Because of this, I think that this market is going to be very difficult to trade over the next couple of sessions, as we will more than likely simply go sideways overall. The choppy reaction to technical levels makes sense as well, simply because of the fact that the nonfarm payroll is on Friday. Nonfarm payroll is exactly what people were focusing on when it comes to the Forex markets right now, and because of that I don't think we are going to see any significant move between now and then.
We do have levels though.
That's not to say there aren't levels to watch. After all, if we can get above the 1.36 level on a daily close, I think this market could easily head back to the 1.38 handle without too many issues based upon my support and resistance work. I think there is essentially an "air pocket" between 1.36 and 1.38, and therefore I could see the market moving through that region rather quickly.
On the other hand, I think there is support all the way down to the 1.33 handle and although we could get down to that area, I believe that it isn't until we clear that level on a daily close we can start shorting with any type of confidence at this point. Because not only do we have that area to worry about, but the 1.35 area of course will be supportive as well based upon the large round psychological significance of the number. With that being said, I am actually staying out of this market until we get the jobs number on Friday, which will determine the next move.
