- The Euro rallied significantly during the early hours on Monday, as we are hanging around at the 1.07 level, an area that has been important more than once.
- With a significant lack of economic announcements on Monday, it makes a certain amount of sense that perhaps those who shorted this market previously were willing to take profit as if there was really nothing out there to move the market drastically in one direction or the other.
The euro of course is a very choppy currency pair to say the least, and it’s not necessarily a market that I enjoy trading. Wasting your time on 20 PIP moves is a great way to blow up your account. The euro isn’t known for trending very easily, and that’s part of why the spread is so tight, as the volatility just isn’t there. However, I do like the idea of launching this market as a proxy for the US Dollar Index, as I can give you an idea as to how the US dollar is performing overall.
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The fact that we bounce from the 1.07 level does suggest that perhaps we could see a little bit of an upward trajectory at this point, with an eye on the 1.08 level. The 1.08 level is an area that previously has been both support and resistance, and therefore it’s likely that we at least try to get there. If we can break above there, then it would potentially open up the door of the 1.09 level. However, I don’t necessarily think that the market breaking above the 1.08 level is going to be easily accomplished.
On the other hand, if we were to break down below the bottom of the candlestick during the trading session on Friday, that could open up the possibility of a move down to the 1.06 level underneath. That’s an area that has previously been very well supported, so I think it’s also an area that short sellers may go looking toward, and therefore it’s an area that’s worth paying close attention to.
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