EUR/USD Weekly Price Forecast – Euro pulls back to consolidateThe Euro fell after initially trying to break above the 1.18 level during the week, forming a bearish looking candle. However, this is still well within the bounds of the previous consolidation, so I believe that this market will continue to go back and forth.
The Euro fell during most of the week, mainly in reaction to the Italian budgetary concerns, as the EU continues to struggle to get all of its members in line. Ultimately, I think that the market has simply reasserted that the area between the 1.15 and the 1.18 levels continues to be the “battlefield.” However, I would point out that this candle is much more bearish than ones that we have seen lately, so this is certainly something to pay attention to.
At this point, I would not want to be a long-term trader in this pair as it simply doesn’t seem to be ready to go anywhere for a significant move. Even if we were to break down below the 1.15 handle, there is a wicket hammer at the 50% Fibonacci retracement level from two months ago. If we break out to the upside, that might be a bit more promising but there’s a lot of noise to be found near the 1.20 level. In other words, this pair remains the playground of high-frequency traders and short-term scalpers. Longer-term traders will find much easier trades around the Forex world, as this pair has been so choppy over the last several months. Until we can break out of one of these areas cleanly and significantly, this will be a very difficult place to put longer-term money to work. I would keep my position size small initially, and if it worked out in my favor add to it.