EUR/USD
The Euro rallied significantly during the trading session on Monday, breaking above the short term resistance that has been rather stringent over the last several days. Now that we are above that area, the 1.1250 level, it looks as if we will continue to try to go higher. While we did pull back just a bit towards the end of the trading session on Monday, we still retained up most of the gains. This is a bullish sign, and it looks very likely to continue the overall consolidation area that we had been in. This area of course is the area stuck between 1.12 and 1.15 above.
With this, I think we are simply continuing the overall consolidation, and therefore a bounce makes quite a bit of sense. Remember that the 1.12 area is structurally important from previous resistance and clustering, but beyond that it’s also the 61.8% Fibonacci retracement level from the lows, so it will attract a lot of attention. Overall, I like the idea of buying for the short term move.
GBP/USD
The British pound rallied a bit during the trading session on Monday to kick off the week, just-in-time to continue the overall support at the 61.8% Fibonacci retracement level, which is basically at the 1.30 level underneath. This is a market that continues to be very noisy due to the Brexit headlines, so obviously it’s going to be difficult to hang onto the British pound for a bigger move. However, if you can enter the market slowly, quite frankly we could have a nice opportunity ahead of us to pick up the British pound “on the cheap.” Ultimately, if we break down below the 1.2950 level, then we will “reset” down at the 1.28 handle. All things being equal though, it’s very likely that we bounce and start reaching towards 1.32 level, followed by the 1.3350 level after that. Obviously, the break out of this area we need to have good headlines involving the Brexit.
