The EUR/USD pair broke higher during the session on Monday, breaking the top of the hammer from the Friday session. The market found a lot of support down near the 1.37 level, as we formed a hammer, touched the 100 day exponential moving average, and saw the 61.8% Fibonacci level as support also. Because of all of these factors, I believe that the Euro will continue to go higher. That being the case, certainly I would be a buyer here, but I do recognize that the 1.38 level might offer a bit of resistance, and as a result this is a short-term move set up initially, but I believe if we can get above the 1.38 handle, we will head to the 1.3950 level given enough time.
Downtrend line
The downtrend line that we see on the monthly chart ran through roughly the 1.3950 handle, and as a result I believe that this market will struggle to get above there. If we can get above that level, I believe at that point time the EUR/USD pair would be a buy-and-hold type situation. However, I believe between here and there that that we will see a lot of choppiness, and as a result it is going to be difficult to hang onto this trade unless of course you have the wherewithal and the nerves to deal with the type of volatility that is common in this pair over the last couple of years.
The market will be choppy time and time again, but if you are willing to hang onto the position long enough, you will be rewarded in my opinion. I think that the market should continue to be positive, but there are a lot of little “micro levels” that will continue to be influential as to how the market behaves over the next several weeks, but I do believe that the buyers will return time and time again. When you look at the longer-term trend, we have been going higher for some time, but it hasn’t necessarily been the easiest move over the last several months.
