The euro pulled back just a bit on Wednesday to break below the 1.10 level before turning right back around and recapturing that area. The candlestick suggests that now that we have had a couple of hammers, it is likely that we will try to bounce from here and go looking towards the 1.11 level.
The area above should be a rather significant resistance barrier that extends all the way to the 1.12 handle, so it is very likely that we could see a reversal candle before too long, and that could be an opportunity to continue the overall downtrend. However, if we were to break above the 1.12 handle, then it is likely we would go looking towards the 1.14 handle, possibly all the way to the 1.15 handle. The 200-day EMA sits at the 1.1450 level, so I think it is only a matter of time before we see plenty of selling pressure in that area.
In general, this is a market that continues to see a lot of choppy behavior, but that is nothing new for the euro. If you are looking for big moves, this is not the pair to trade. However, looking at this chart, it is obvious that we are going to have nothing more than noise in the short term. I think that if we were to rally from here, it is still not worth the amount of noise that we see on the chart to put your money at risk.
If we were to break down below the bottom of the couple of hammers, that would obviously be a very negative sign and it could send this market down to the 1.0850 level. It is an even a better signal than any type of rally, because it would be such a breach of support over the last 48 hours that you would have to pay attention to it. If you do choose to trade this pair, it is worth noting what the US dollar is doing against almost everything, as it could give you an idea as to where this market will go. Looking at this chart, I think we will probably have a move coming, but we will have to wait and see what the next day or two days have in store in order to get a bit of clarity.
