The Euro broke lower during the trading session on Tuesday, breaking the 50 day EMA. We are starting to see a little bit of support underneath though, so it’s very likely that we could see a bit of a pop here, perhaps after some type of short-term pullback. The 1.1250 level should be supportive, just as the 1.12 level will be. We are still very much in consolidation, so a pullback from here will probably only serve as a momentum gathering mechanism.
If we can break above the 1.1325 level, then the market momentum could continue to go higher and reach towards the 1.1425 level after that. Overall, it’s very likely that we will see more upward pressure than down, as we continue to consolidate in the larger range that I have marked on the chart. Currently, I see no reason to think that we are going to break out of this 300 point range.
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The British pound did pull back just a bit on the open and drop below the 1.3050 level towards the end of the day. However, there is still plenty of support down at the 1.30 level, which could bring in more buyers. If we were to get a significant break down below the 1.1250 level, then it opens the doors to the 1.28 level underneath. That’s an area that would be the 100% Fibonacci retracement level, and of course a reasonable place to think that the buyers may come in to pick up value.
The alternate scenario is that we can rally from here or just below, and then go looking towards the 1.3133 level. A break above that level opens the door to the market to try to make a run towards the top of the consolidation area that is marked on the chart.