Last week saw a quiet and choppy market with the pair closing on Friday only 90pips below its Monday open. The bull’s still had control early in the week with a slight push higher on Monday towards November 2010 highs of 1.4280. However momentum was not strong enough to take the market to this level and we consequently saw a fall back towards lower areas as the week progressed and Portugal’s problems put pressure on the Euro once again.
Last week our analysis suggested we’d see a push towards 1.4280 followed by a pull back. With such bullish price momentum since January we’d expect this market to continue gaining and moving to higher ground.
The next obvious area of support for the EUR/USD is 1.40. Being such a strong psychological and technical level a ‘bounce’ of this area should be expected and seen as an opportunity for buying back into this market and rejoining the current uptrend with initial targets being at last weeks highs.
Should 1.40 not hold a push lower to 1.3850 could be expected and again we could see the market ‘bounce’ of this level providing further buying opportunities.
Any break and close (on the daily TF) above last week’s highs would be seen as very bullish and we could expect to see the market push towards 1.4280 and beyond.
Last week our weekly TF analysis showed the market moving in a series of higher highs and higher lows. We were unable to see the market break our last higher high and continue with this pattern. Our stance is still the same, should we see a break of the last higher high (October/November 2010 Highs) we would have our next high and could expect this stepping pattern to continue.
It’s important to remember we will not be ‘jumping’ into any trades at the levels/areas we’ve mentioned and will be looking for price action sets ups before entering this market.