EUR/USD falls during the week only to find buyers

The EUR/USD pair initially fell during the week but found enough support at the previous uptrend line to rally a bit and form a hammer. That’s a good sign, and I think that the market is going to continue to go sideways, perhaps trying to build up enough momentum to break out to the upside. The 1.25 level above is resistance, and if we can clear that level I think that the market can go much higher. When you look at the uptrend recently, you can see that the bullish flag being broken to the upside is a good sign, and I think it measures for a move to the 1.32 handle based upon my analysis. However, we need some type of catalyst to make that move.

I believe that if we do break down or through the uptrend line, the market probably goes sideways in general, with the 1.21 level underneath being support. I think that in general, if we don’t go higher, we will probably go sideways more than anything else. The 1.21 level underneath should continue to be important, based upon the structural resistance that it once provided. I anticipate that this market will continue to be very choppy, but we are getting close to an area of necessary decision, and I think that decision eventually will have to be made, and we should follow once it becomes apparent. In the meantime, keep your position size small so that you can ride out volatility.