The Euro rallied significantly during the week, reaching towards the downtrend line which is the top of the descending channel that the market has been in. Beyond that, the 50 week EMA is sitting right there, and the 1.12 level offers a lot of resistance both structurally and psychologically as well. All things being equal, the pair is still very much in a downtrend, but this last candlestick does look somewhat strong. The question now is whether or not this rally was due to short covering, or if it’s a fundamental change. At this point, it would take a daily close above the 1.12 level to get me interested in buying.
EUR/USD Video 30.12.19
At this point, the market should continue to go towards the 1.14 level above if the 1.12 level is broken on a daily close. Otherwise, if the market was to rollover from here it’s likely that the 1.11 handle would be short-term support, and then eventually the 1.10 level would be targeted. If the market breaks down below there, then it’s likely to go to the 1.09 level and continue even lower. The next week will be difficult, because the volume will be almost nonexistent, so keep that in mind. It would not be surprising at all to see this market going back and forth and make little in the way of momentum moves. Ultimately, this is a market that should continue to see traders open and close short-term positions, perhaps take profits from the longer-term trade from early in the year as well. January 6 will be when volume comes back.
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This article was originally posted on FX Empire
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