EUR/USD Edges Higher, Resistance Overhead

The pair finished higher last week, moving closer to the target mentioned last week at 1.3200.  13100 is actually the start of the resistance area, which is in effect till just above 1.3400.  Movement above 1.3100 indicates that 1.3200 is highly likely to be tested, but beyond this pair will enter a “no-mans land.”  The acceleration of the secondary advance in this trend higher indicates a broader advance is underway, yet reaction around this area will provide confirmation.  1.3400 ultimately needs to be broken to the upside.  Yet, as mentioned the area between 1.3200-1.3400 at this time is where new trades don’t likely need to be made.  Waiting for a rejection off the area, or a break above the area provides for higher probability trades.

1.3100 has so far held off further advances.  Penetration indicates a test of 1.3200 which is the current target.  Movement beyond 1.3200 should indicate a test of 1.3400 but given the clusters of former price movement in this area, the probabilities are not ideal for trading in the area.

Failure to move through this area, or a drop below 1.2700 shows weakness.  A drop below 1.2500 shows the updraft has ended and indicates a renewed trend to the downside.  Active traders may watch 1.2900.  The level does not jeopardize the uptrend in and of itself, but movement below it does indicate a further pullback.  How the pullback then reacts will determine if the support below it holds the uptrend, or the downtrend.

Trend remains up, and the former downtrend has been broken (written about before).

Cheers,

Cory Mitchell, CMT

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