The EUR/USD pair broke higher during the session on Friday, clearing the top of a hammer that informed on Thursday. While this is normally very bullish sign, I do have reservations because of the significant amount resistance that we’ve seen at the 1.37 handle. In fact, there is a bit of a pocket of massive resistance between the 1.3650 level and the 1.37 level, so I find buying this market to be almost impossible, especially considering that there is probably significant amount of resistance just above the 1.37 level as well.
If we pullback from here, there is a significant amount of support below that should make trading this market almost impossible. The result will be very choppy conditions, and unless you are looking to scalp the market, this pair is probably off-limits going forward as there’s no real reason to get involved in a market that is just looking to take your money.
Going forward, we will eventually have a market that’s able to be traded, but it might be a while.
No market can go sideways or know where forever, but ultimately I see that there are two areas that have to be broken in order to start placing trades again with any significant amount of confidence. The 1.37 level above needs to be cleared significantly in order for me to start buying again, and at that point time would expect to see a move to the 1.3950 handle eventually. Don’t get me wrong, it will be choppy and very difficult to deal with, but ultimately it should get there.
On the other hand, if we break down below the 1.35 handle, I think we could go to the 1.33 level. That move would be relatively easy, but getting below the 1.33 level could send this market to the 1.31 handle, a move that I things a little bit more difficult. Nonetheless, this is a market that in the meantime I things going to be very difficult to deal with, and quite frankly not worth your time. Unfortunately, many new traders will be lured into this pair based upon the cheap spread.
