- As you can see, the euro initially did try to rally a bit during the trading session on Monday, but then gave back quite a bit of the gains to continue to see a lot of sideways action.
- Perhaps we are trying to form some type of basing pattern.
- At least, this is the situation we find ourselves in at the moment.
The 1.08 level underneath of course is a large round psychologically significant figure and that of course, I think, will have a certain amount of influence. We are currently below the 200 day EMA, but at this point, I think that the 1.08 level of course will continue to matter. And if we can turn around and bounce back to the upside, then I think it's just more of the same working off the froth. The US dollar has exploded in value against the euro, and therefore the downtrend has been rather massive. If the market were to turn around and take out the 200 day EMA above, then I think it's possible that we could go looking to the 1.10 level.
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On a Move Below Support at 1.08
On the other hand, if we break down below the 1.08 level, perhaps closing on a daily candlestick underneath the 1.0775 level, then I think it opens up a move down to the 1.07 level, followed by the 1.06 level. This is a market that has got far too ahead of itself, so it does make a certain amount of sense. Therefore, I think you've got a situation where people are trying to sort out where they're going next. But right now, I think it's more or less trying to find stability and looking for that next catalyst. Yes, the Monday candlestick has been very ugly so far, but we haven't broken through anything significant as far as support is concerned. So, I'm not sure how much this will change my analysis other than I think we still have some work to do before we make our next big move.
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