The EUR/USD pair rose slightly during the Monday session as the selloff that we saw last week took a bit of a breather. The area that the pair sits in at the moment is the start of fairly significant support, so a bit of a bounce would more than likely be expected by many participants in the market.
The real level of support is lower, at the 1.30 handle. However, the clusters of orders can be seen all the way to the 1.3250 level, and this is what will make this pair so difficult to break back down for the bears. None the less, it is kind of hard to think of too many reasons to buy this pair as well. In fact, this is a very choppy and undesirable pair to many in the markets at the moment, which is ironic considering it is the first one many traders are encouraged to trade in order to learn the markets.
The headlines continue to cause issues in Europe, and the most recent headlines about Spain failing to meet the target debt to GDP ratio does nothing to make the markets calm going forward. However, the selloff last week more than likely has the market thinking that the selloff had already absorbed that bad news.
The 1.3250 level has been a bit of a midpoint in this recent trading range, so taking a trade at this level is going to be difficult, and wouldn't be the smartest move in our opinion. However, one must keep an eye on the market as it can also be used to measure the risk sentiment in the currency markets. This in turn can give you a hint as to whether or not you want to own or sell certain currencies such as the US dollar or Swiss franc.
The market is still in a downtrend for our money at the moment, but we do recognize that the next 200 pips to the downside are more than likely going to be difficult for the bears to take. With this in mind, we are waiting to see reaction at either 1.30 or 1.35 to give our next clues.
EUR/USD Forecast March 6, 2012, Technical Analysis
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3