The EUR/USD pair had an important day on Thursday as the Spanish auctioned off their two and ten year bonds to a reasonable amount of demand, albeit on higher rates than the last sale. Because of this, the Euro will have been somewhat weighed upon, but the fact that the bond markets weren’t quite as scary as they could have been, this pair didn’t have much downward momentum.
The pair has been bouncing off of the 1.30 level for some time now, and the action on Thursday seems to suggest that the pair will continue to bounce from this level for the foreseeable future. The entire world seems to think that the Euro is going to fall through the level, and this may be the reason that the market simply can’t fall – there is more pain to be delivered to the bear of the Euro than the bulls.
Truth is though, the pair is without a doubt bearish overall, and as a result we aren’t willing to buy the market but would rather sell it from higher levels. The pair looks like it is range bound between the 1.30 and 1.35 levels, and because of this we are looking for weak action at higher levels to sell, and would also sell a daily close below the 1.30 level as it would show a real change of momentum in this pair. Until one of these actions happen, we are choosing to stay out of this market as it has been so choppy as of late, and as a result has been very destructive to many accounts out there.
The hammer from the Wednesday session suggested support, and the lows on Thursday couldn’t break below the lows form that session – suggesting that the support is still there. Even though there are hundreds of reasons not to own the Euro, it is obvious that someone out there with a love of money has decided that the Euro needs to be protected. With all of this in mind, we are going to either sell the breakdown confirmation below 1.30, or we are selling the first weak candle at higher levels.
Written by FX Empire