The Euro initially fell during the trading session on Tuesday but turned around of form a massive hammer as the 50% Fibonacci retracement level has in fact attracted to traders yet again. This hammer looks to be a good buying opportunity, and I think that it’s only a matter of time before the buyers come in and push to the upside. This makes a lot of sense, as this is an area that has been important more than once. Once we clear the 1.15 level, the 1.1550 level would be the next target, and once we break above there I think we could continue to go even further. The alternate scenario is that we break the bottom of the hammer, but that doesn’t seem to be as likely at this point. We are of course worried about Italian debt, but I think it’s obvious that the Americans are concerned, so we continue to see selling early, only to be followed by buying.
The British pound rallied after initially pulling back during the day on Tuesday but bounced again to form another hammer. However, the hammer on Tuesday with much different than the hammer on Monday in the sense that we broke above the 1.3125 handle and clear the highs from the previous hammer. This is a very bullish sign but I also recognize that there is a lot of noise just above and of course there’s always going to be the possibility of a headline coming out that hurts the British pound due to the Brexit. I think at this point we are continuing to buy dips and will continue to see value hunters return every time we get a nasty selloff.
This article provided by NewsEdge.