The EUR/USD pair initially tried to rally during the previous week but found enough resistance near the 1.24 level. We rolled over to form a bit of a shooting star, which is a negative candle, but there is a lot of support underneath. The 1.21 level underneath is massive support, as you can see on the chart. The uptrend line looks to be very supportive, so I think it’s only a matter of time before we see buyers. In the short term, I would not be surprised at all to see this pair drift a little bit lower, but by the end of the week I anticipate that we will have buyers coming back into the market. I believe that we are trying to build up enough momentum to finally reach above the 1.25 handle. Alternately, if we do break down below the 1.21 handle, then the market breaks down.
The British pound rallied during the week, but as you can see I have a downtrend line on the chart that has shown itself to be resistant. The 1.40 level above is massively resistant, and I think that it’s only a matter of time before we test that level again. If we can break above the 1.40 level, the market will continue to go much higher. In the meantime, I suspect that this pair will drift a little bit lower as well, trying to find momentum from lower levels.
The US dollar had initially rally during the week, but struggled just below the 107.50 level, an area that is the top of the current consolidation area from what I can tell. I also have an uptrend line that coincides nicely with the 105 handle, and therefore I think we will probably continue to be very choppy this week, and I anticipate the short-term back and forth trading will probably dominate what we see in this pair. However, if some type of trade were flares up, that will send this market below 105 and crashing much lower.
The Australian dollar initially tried to rally during the trading week, testing the 0.79 level, but then rolled over quite significantly. In fact, we closed just a bit of the 0.77 handle, an area that has been supportive in the past. If we break down below 0.77, I suspect we go at least another handle lower. There is an uptrend line that forms the bottom of the uptrend channel near the 0.76 level, so I think it’s only a matter of time before the buyers get involved. A breakdown below there opens the door to the 0.75 handle.