The euro rallied a bit during the trading session on Monday, testing the crucial 1.18 level. The 1.18 level is an area that I think a lot of people are paying close attention to, due to the fact that it had previously been major resistance, and now the standing that eventually we end up finding potential support in this area. With that being said, it’s interesting to see that we broke below that level and then turned around to go looking at the 1.18 level.
Technical Analysis
Technical analysis for this pair is obviously bullish over the last several months, as we have been reaching the 1.18 level. The market is likely to continue to look at the 50 Day EMA underneath as a major support, which sits at the 1.1670 level and rising. I think of that more or less as a trend line, and if we can stay above there would obviously be very bullish. However, if we were to break down below that level, then the 1.16 level could be targeted, which is a major significant support level.
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On the other hand, if we were to break to the upside the 1.19 level has been resistance, and breaking above that level opens up the possibility of a move to the 1.20 level. The 1.20 level of course is a large, round, psychologically significant figure, and an area where a lot of people will be looking to take profit or perhaps start shorting. Because of this, I would anticipate that the area should offer a significant amount of resistance, but if we were to break above there, then I think you get a longer-term “buy-and-hold” type of situation.
Alternatively, if we were to break down below the 1.16 level, then the market opens up the possibility of a move down to the 1.14 level, which in that area, I think you would be starting to talk about testing the 200 Day EMA for major longer-term support. In the meantime though, I think this ends up being very choppy and somewhat sideways.
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