The EUR/USD pair fell again during the session on Thursday, testing the bottom of the hammer that we formed on Wednesday. That of course is a very negative sign, and I now believe that the sellers may start to take control again. If we can break down below the bottom of the hammer from the Wednesday session, I see no reason why this pair will go back down to the 1.35 handle, testing major support at that area. So now my thought process is that we may be trying to figure out what the summer range is going to be.
I essentially see 2 different scenarios at this point in time: We either continue to find support here and bounce between the 1.3650 level and the 1.40 level, or we drop down to the 1.35 handle, and find that as the floor. If that’s the case, it’s possible that we bounced between their and 1.37, or possibly even as high as 1.40 if there are enough headlines out there to move the currency pairs during the summertime, which isn’t always the case.
Selling on a break
Right now, I have to admit that I favor the downside but I need to see the bottom of the hammer taken out from the session on Wednesday in order to feel comfortable selling. At that point time, I see no reason why we will continue to 1.35, so at that junction I would be more than willing to take my profits as I think it would happen rather quickly. Things get truly interesting if we break down below the 1.35 handle oh, because I don’t think most market participants expect that to happen. If that happens, I would have to think that a lot of Euro longs would suddenly find themselves in a lot of pain.
Going forward, I could be convinced to buy this market if we get above the 1.3730 handle, which would break the top of several hammers. Until then though, I’m either going to sell or simply sit on the sidelines in this particular market.
