The US dollar rallied during the day on Monday, after initially falling. However, I think that the 113 level above is going to offer a bit of resistance, just as the 112-level underneath is going to offer certain amount of support. Because of this, I anticipate that we will see back and forth trading as stock traders around the world away earnings reports out of the United States. This has a strong influence on this pair, as it typically stronger stock markets will send this market higher. Because of this, I feel that we are in a “wait-and-see” mood right now, but I do recognize that a breakdown below the 112 level will send this market looking for support below, which I think it will find somewhere around 110. Alternately, a break above the 113 level sends this market looking for the 114.50 level above, which was the most recent high.
Short-term range bound trading
In the meantime, I think it’s going to be short-term back and forth trading, and if you are nimble enough, or prefer to trade very short-term charts, this might be an excellent market to be involved in over the next couple of sessions. Again though, be aware the fact that a break above or below either one of those levels mentioned previously is a sign that the market is going to move and a pickup and momentum should be noticed at that point. I believe that the market eventually will find its footing and decide which way to go, but right now I believe that we are going to see more choppiness than anything else. This is the type of scenario that short-term traders using Stochastics absolutely love as we can pick it apart in small increments.