The Euro skyrocketed against the US Dollar during the Monday session as it was announced that the German and French leaders had agreed to decide something and come up with a plan for the debt crisis, and to recapitalize the EU’s banks. The biggest problem with this: There are no concrete plans being announced.
Even with this being said, the Euro shot straight up, and the move was impressive. The real question is whether or not there was a real move during the session. The 1.37 resistance level was retested, but continued to hold the price down. The candle is massive and green, so a move up wouldn’t be overly surprising. The move looks like one that could be faded, but we have not seen a negative candle from which to do so.
The pair is still decidedly bearish, and we think that this short-covering move is going to set up for a sell soon. The easiest direction is to the downside, and we still think this is the long-term direction. We will continue to sell rallies, and are currently waiting to see an exhaustive candle or a long red one.
Written by FX Empire