The EUR/USD pair rose during the session on Tuesday as the Euro did well overall. We have broken through the last vestiges of support at 1.28, and see a wide open market all the way to the 1.30 level. With this in mind, it certainly in reaction to the expected passing of the ESM in Germany as to constitutionality by the High Court. Also on the mind of traders that are buying this currency pair is more than likely the probable expansion of quantitative easing from the Federal Reserve.
We have broken above the 61.8% Fibonacci retracement as well, and as such there really isn’t much to get in the way now. The candle looks fairly tall, and is closing towards the top of it which of course is a good sign as well.
If we pullback, the 1.28 level should act as support at this point, and should have new buyers stepping in. By all accounts, the Euro has broken out to the upside, even though the fundamentals don’t necessarily support the move. This could be short covering, or could just be a simple chase for yield. Nonetheless, we think that the next 150 pips will go in the Euros favor.
Once we had the 1.30 level however, we are attacking the area that was previously defined by a descending triangle. There will be a lot of noise in this area, and serious resistance. With this being said, we are willing to take profits as we approach 1.30 in order to capitalize on the move, but not risk too much of her capital in the first place. After all, these gains should be relatively quick answers nothing above that looks resistive until we get to that area, and as such taking quick profits is a fairly prudent thing to do.
As for selling is concerned, we see absolutely no argument to do it right now, and won’t really look for that until we see the 1.30 handle. Once we get up there, if we get some type of resistant candle like a shooting star, we would be more than willing to sell at that point. But the truth is, at this point in time there looks to be no reason to even consider it.
Written by FX Empire