The Euro rallied initially during the trading session on Thursday but gave back the gains at the 200 day EMA just as we did during the trading session on Wednesday. This forms two shooting stars in a row, and it suggests that perhaps we are going to continue to struggle to go higher. That being said, we also have a hammer sitting just below the 200 day EMA that formed on Tuesday that a lot of people will look at. The question now is whether or not we are simply hanging around the 200 day EMA, or are we trying to form some type of bearish flag? Because of this, I am a bit cautious about putting a lot of money to work, and I think that Friday will probably be a great day to simply observe whether or not we can break out of this range.
To the upside, the 1.20 handle is significant resistance so if we were to break above there, then it is likely that we could go looking towards the 1.22 handle above, which is where we broke down from. To the downside, if we were to break down below the 1.1850 level, then I think the market could go looking towards the 1.18 level, possibly even the 1.17 level rather quickly.
Keep in mind that the Euro is very choppy to say the least, so it is something that you need to pay close attention to as you do not want to put too much money into the market right away. I think at this point, we are probably going to be very noisy, so I do not think it is going to be easy to base this off of just one day. We need to break out of this range in order to show signs of clarity and momentum in one way or another.
One thing you can use this pair for is an idea as to what is going on with the US dollar, as the Euro is one of the bigger components of the US Dollar Index, so while I may not necessarily take a trade here, if I see the US dollar moving in this pair, I may extrapolate that into another trading estimate such as the Australian dollar, Canadian dollar, or even various commodities depending on how strong the move is.
