EUR/USD
The EUR/USD pair went back and forth during the trading session on Tuesday, forming a bit of a neutral candle. I think we have a great symbol for what we have seen over the last several weeks, as the market couldn’t decide which way to go. The 1.24 level show signs of resistance that extends to the 1.25 level. If we can break above the 1.25 handle, the market should be free to go towards the 1.32 level. I believe the pullbacks will continue to find support near the 1.22 handle underneath, as we have been in a tight range for some time. Short-term back and forth trading should continue to be the way going forward in this market, but eventually I suspect that we will break out to the upside. If we break down below the 1.21 handle underneath, it’s likely that the market will unwind down to the 1.20 level after that.
GBP/USD
The British pound rallied initially during the day on Tuesday but found the 1.44 level to be a bit too expensive for most traders, and we rolled over at that point to show signs of exhaustion. I believe that the 1.43 level is the initial area where we can see buyers get involved, but a pullback below there to the 1.42 handle could be possible as well. I do believe in the longer-term viability of the uptrend, and that should continue to be a situation where value hunters will come back into the market, looking to pick up the British pound “on the cheap.” I have no interest in shorting this market and believe that we will eventually break out and above the 1.45 handle. Once we do, the market can continue to go much higher, perhaps grinding to the upside for the longer-term.
