The Euro rallied a bit during the trading session on Tuesday, breaking above the significant 1.12 level. However, we did see a bit of resistance after the initial move higher, so that of course is something worth paying attention to. At this point, it’s a bit early to start selling but it does strike me as very likely that we will roll over. The 50 day EMA is just above, and of course it’s not until we break above there that I think we have enough follow-through to continue to go higher. If we do break out above there, then we go to the 1.13 level. Clearing that area could bring in even more buyers, sending this market towards the top of the previous consolidation area. All things being equal though, I think that we will turn around and fall below the 1.12 level, and then start looking towards the 1.11 handle.
The British pound shot higher during the trading session on Tuesday, breaking above the 1.30 level, which is an area that is worth paying attention to. The fact that we did break above there is a good sign for the British pound, but one would have to think that it’s only a matter time before some type of negativity knocks it back down. This has done real damage to the previous descending triangle, so this point I am waiting to see if the 1.31 level holds. That is an area that I had been talking about for some time, so if we clear that, it’s likely that the market will continue to go even higher. I anticipate that we will see some selling, but I am waiting for an exhaustive daily candle.