The EUR/USD pair had a slightly positive session on Friday, as we got above the 1.31 handle again. What’s been interesting about this pair is that there have been so many hammers form lately, one would think that the market would’ve taken off by this point in time. However, we really having, so it makes you wonder whether or not we are simply building up for some type of explosive move higher, or the sellers are about to step back in and exert their control.
The Federal Reserve seems to be less and less confident in with are going to do next, and we believe this has a lot to do with why this market seemed so confused. Looking at the charts from a longer-term perspective, there is a weekly downtrend line that the market will have to deal with closer to the 1.33 handle. Because of this, we feel that an area above current pricing is more than likely going to cause trouble for the buyers. Resistive candles up there should be sold, but in the meantime there may be a potential buying opportunity for the next couple of days.
Going forward, we think that this market will more than likely have to struggle with quite a bit above. Really the only way we see this market breaking above the weekly downtrend line is if the Federal Reserve goes ahead and admit that it simply cannot taper off of quantitative easing. That would be a bit of a shock to the marketplace, and the Euro would undoubtedly benefit from that.
Looking at the longer-term charts though, we see a larger the ascending triangle trying to form, and that weekly downtrend line is in fact the top of it. That is bad news for the buyers longer-term, but that doesn’t mean there isn’t a couple of hundred pips waiting to happen. Going forward, we would buy a breakout above the 1.3150 level, but we would also be willing to sell any resistive candle close to the 1.33 handle. That being said, this pair is about to get really interesting.
Written by FX Empire