The EUR/USD pair absolutely fell apart during the Monday session as traders continue to scrutinize the EU bailout plans. The market sliced right through the potentially supportive 1.39 – 1.40 level, and this is a very bearish sign.
However, the market did close in the middle of a massive cluster of candles from a few days ago. It appears that the 1.40 area may become a bit of an “inflection point” in this pair, and could be key overall. The market looks bearish, and headline risks could send this pair back down. However, the area we are in presently looks like it could offer some support, so a bounce is highly probable. We will more than likely see a lot of volatility over the next several days in this pair, and going forward for quite some time. With the ECB and Fed meeting this week, this could be the catalyst for a major move. At this point in time we are willing to see if the market breaks below the lows from Monday, and if so – we would sell. Otherwise, we could see selling in the near future, but would need to see a bounce first. Buying isn’t a thought at the moment.
Written by FX Empire