It’s all short-term trading at this point, so you need to be cautious about overstaying your welcome.
The 1.01 level underneath is a significant support level on short-term charts, as we have seen a lot of buying pressure in that general vicinity. The market has broken through there previously but found the parity level to be far too supportive to break down below it. On the other hand, the 1.03 level has been important previously as resistance, and of course, we have even more importance on the 1.04 level as it has a lot of “market memory” attached to it.
The 1.04 level has previously been supported previously, so now it should be resistance. You’ll notice that I have it marked on the chart, and it should be an area of extreme difficulty digging above. Even if we break above there, the 1.06 level needs to be broken above in order to change the overall trend. I don’t see that happening anytime soon, mainly due to the fact that the European Union has a whole host and litany of problems, not the least of which will be energy supply.
That being said, in the short term I think we probably do bounce because the market does not look like it’s ready to completely break down. Watch interest rates in the United States, because if they start to spike again, that might be reason enough to send this market much lower. On the other hand, if they start to fall, that might give a little bit of a reprieve to the euro, at least for the short term. The 50-day EMA also has offered a significant amount of technical resistance a couple of times, so that is something worth paying attention to. Either way, it’s all short-term trading at this point, so you need to be cautious about overstaying your welcome.
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