Looking at the EUR/USD pair, you can see that we went back and forth during the course of the day on Monday, initially trying to rally but struggled at the 1.1125 level, and then fell enough to form a shooting star. With this, the market looks as if it is going to reach down towards the 1.10 level given enough time. Ultimately, I think that this pair will continue to be very volatile so it’s difficult to trade this market in general, as you will have to focus on short-term charts.
Because of this, the market looks as if it is one that you will have to look towards hourly charts, and possibly trade smaller than usual positions as there is simply far too much in the way of noise in this market to hang onto anything for significant moves. On top of that, if the keep in mind that we are at the end of the summer, and that of course tends to mean that the big-money players are away at vacation, as there is a serious lack of interest.
Small ball
I believe that we’re going to have to play “small ball”, at least until the liquidity comes back into the market, somewhere around the beginning of September. There is no official starting date obviously, but you will be able to notice as we will get a move in one direction or the other with significant. Quite often, it is the Nonfarm Payroll Numbers coming out, but it can be various other things as well.
I think at this point in time there’s probably more of an upward bias from the longer-term, at least from the sense that the Euro has probably been oversold at this point in time. However, until things show some type of significant momentum, I have to believe that this market continues to find the 1.12 level overly resistive, and the 1.10 level as support. On top of that, I also believe that the market finds support down at the 1.08 level as well. In other words, we are simply consolidating between the 1.08 level and the 1.12 level from a longer-term perspective. Eventually though, we will break out.
