The Euro pulled back significantly during the Friday session, but returned to turn around and show signs of activity. The market is above the level 1.02, It’s an area that I think a lot of people will be interested in, so buyers are likely to be a little greedy. However, we need to break above the highs of the previous three sessions in order to start the move, and at this point, we can move to the 1.04 level.
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The shape of the candle is a kind of hammer, and this indicates that there is a certain amount of support at the bottom. However, the ECB’s 50bp hike in rates has been a bit of a shock to the market, so I think that’s part of what we’re trying to price. However, the 1.04 level above is the start of the previously important area, so ‘market memory’ can come into the picture and offer a lot of resistance. Furthermore, the 50 day EMA is just above that area and sloping downwards, so we are likely to see a lot of technical resistance there as well.
All things being equal, we are in a very strong downtrend, So I think it might just be a matter of time before we move on. This would be especially true if the Federal Reserve suddenly decided to raise interest rates by 100 basis points, which initially pushed the euro to parity. Ultimately, I think this market will continue to see a lot of volatility, but if you are patient enough, you will probably see an opportunity to sell this market once more. At the moment, short-term traders will probably try to lift this market, but I have no interest in trying to buy a bottom here.
If we eventually break below parity at the daily close, It is possible that we can go down a lot further. The fact that the EU still sees a problem with energy suggests that the economy is in real trouble, just as the European Central Bank is trying to raise interest rates. I don’t see anything good coming out of the EU anytime soon.
The chart was generated by . platform TradingView
