The EUR/USD pair shot straight up during the session on Thursday as the Euro gained against pretty much everything. However, we are still within the consolidation area that is bordered by 1.34 and 1.3250, and as such do not consider this market broken out yet. We definitely favor the upside at this point in time, but recognize that there is probably going to be a ton of resistance between 1.34 and 1.35 going forward.
Having said all that, if we managed to break above the 1.35 level we would be breaking the neckline of a massive inverted head and shoulders. This inverted head and shoulders is so large that it suggests that we would go another 15 handles higher to the 1.50 level. This is a significant move, and can only be thought of as an overall long-term type of trend.
If you have not been trading Forex for over four years, you may not be aware of the fact that he used to be as simple as buying this pair every time it pullback. If we can get above the 1.35 level, it may return to that old type of trading environment. Looking back, it’s easy to see how it would have been some of the easiest money you could’ve made, and as a result we could be entering a new phase in the Forex markets overall.
If we do Internet type of market, you will find that you come back to this pair over and over again, and if it’s anything like it used to be you may even see a lot of traders specializing in just this market. It used to be so profitable that people literally would trade this pair only, with the occasional trade in the cable pair or the Yen.
Looking at this chart, it will more than likely be a serious fight to get to that point. However, it certainly looks like the Euro is starting to pick up steam in the absolute worst fears of a European meltdown have been avoided. With the European Central Bank willing to back up the bond markets on the continent, we may just be entering a new phase in Europe.
Written by FX Empire