EUR/USD initially rally, but struggled later in the week

The EUR/USD pair tried to rally initially during the week but found the 1.25 level to be far too resistive to continue going higher. I think that the market breaking above the 1.25 level should send this market much higher, perhaps reaching towards the 1.32 level. Ultimately, we have broken above the top of a significant bullish flag, so I think that shows that we could continue going higher, perhaps to the previously mentioned 1.32 handle, based upon the measurement. However, if we break down below this uptrend line, and we most certainly could do to the shooting star, that could send this market down to the 1.21 handle where we would find the next support level.

Ultimately, I think that a pullback at this point offers a buying opportunity as we continue to see bullish pressure. However, if we were to break down below the 1.21 handle, the market would probably breakdown rather significantly. If that happens, I would anticipate a move down to the 1.17 level. I think that the volatility will continue to be an issue, but longer-term it still looks as if there is a lot of fight left in this market. We have been consolidating, and I think until we get some type of impulsive move it’s going to be difficult for longer-term traders to put money to work. Once we get a decision on the directionality of this pair, I think you can start to play larger positions, as the markets continue to await confirmation of the next phase of movement.