• The Euro initially did try to rally during the trading session on Wednesday but gave back gains near the 0.87 level.
• The 0.87 level is a large round psychologically significant figure that a lot of people would be paying close attention to.
• But when you look at the chart, you can see that we are basically in the middle of a larger consolidation area between 0.86 on the bottom and the 0.8750 level above as resistance.

As we are basically in the middle, I think this is a coin flip. But when you look at the longer term chart, we are most certainly bullish. We are testing an area that's been important multiple times in the past. And of course, this is a market that does tend to be somewhat choppy. I suspect this is a situation where if we do pull back from here, there will be buyers underneath, especially near the 50 day EMA.
 

(Click on image to enlarge)

No Real Interest in Shorting. Yet.

I don't have any interest in shorting this pair because quite frankly, I think we're stuck in this range. But if we did break down to the 0.85550 level, then you have to somewhat at least entertain that thought. If we can break above 0.8750, then obviously that would be very bullish for the Euro. I think you've got a situation here where both of these currencies are starting to top out simultaneously, and it makes sense that we don't have a whole lot of wiggle room here. 150 pips is a lot in this pair.
 

Remember the pip size is bigger than most other Forex pairs. And it does tend to be more of a grinder. However, once we figure out the direction we're going, it will be explosive, because it always is in this pair, it seems. With that being said, I'm pretty neutral on this, but I am looking at pullbacks as potential buying opportunity especially near that 50-day EMA.

More By This Author: