The EURUSD pair went back and forth during the course of the session on Wednesday, as we found the 1.12 level to be supportive. We believe that this market continues to bounce back and forth as we have no real chance of a significant trade at the moment.

We believe that the market will continue to see quite a bit of volatility in this general vicinity, and as a result it will be difficult to hang onto a trade for anything more than a scale.

The resulting candle is a bit neutral, so we think that the volatility is not only here, but it will continue. However, this is very tight volatility, as the market simply cannot make its mind up. It’s not a big surprise though, because after all we have a lot of drama coming out of Greece and of course the debt payment situation, and that of course we don’t really know what’s going on with the Federal Reserve.

There are suspicions and expectations out of the marketplace that the Federal Reserve should raise interest rates in September, but I think it’s a “one and done” type of situation.

Ultimately, this is a marketplace that will have a significant amount of resistance at the 1.14 level. Because of this, we think that it is going to have to kind of build up enough momentum in order to make this market break out to the upside. Once we get above the 1.15 level, we feel that this market will have completely broken out, and will have entered a longer-term buy-and-hold type of trend.

We would also buy on dips after that happened, so we would become extraordinarily bullish.

As far selling is concerned, we don’t really have any interest in doing so because we see a significant amount of support all the way down to the 1.10 level. In fact, we would have to break down below the 1.09 level in order to feel comfortable selling as there is a cluster below the 1.10 level down to at least that handle. Nonetheless, we believe that buying on dips on short-term charts will probably be the best play.

Editor’s Note: Equity investors/traders can use the Currency Shares Euro Trust (FXE, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro (EURUSD), minus ETF fee. The fund seeks to reflect the price of the euro with the shares representing a cost-effective investment relative to investing in the FOREX market.

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