- The Euro fell a bit during the trading session on Friday as we have broken down through a 50 day EMA, all things being equal.
- This is a market that I think continues to see a lot of noisy behavior with the 0.85 level underneath offering a target for short sellers and of course, a major round figure.
This is a market that has been very choppy, but at this point in time, it looks like the market is still bearish, despite the recent attempt at a massive breakout in the direction of the Euro.
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Ultimately, this is a market that I think given enough time, we'll have to test that now that we have broken down the way we have. The 0.85 level underneath is a large support level that is not only based on the number itself, but the fact that we have seen it show itself as being important multiple times. If we were to break down below the 0.85 level, then it's likely that we could see a big flush down to the 0.84 level, maybe even the 0.83 level. On the other hand, if we turn around and take out the shooting star from last week and the 200 day EMA, then we could go looking for a move to the 0.8650 level. In general, this is a market that I think continues to be very noisy and it is worth watching because even if you don't trade this market, then you can use it to pick up on euro or pound strength to play against the US dollar.
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So, it does serve a purpose regardless. It's in a process called triangulation. Right now, though, it certainly looks as if we are going to test this low level again, so we'll have to see. I think if you get a move to this low in another bounce or just above it, then that might be your signal that this is a trend change and we could eventually go looking to the 0.8750 level.
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