The EUR/USD pair went back and forth during the session on Wednesday, mainly in reaction to the Federal Reserve meeting minutes that were released at 2:30 PM New York time. Essentially, the Federal Reserve decided to “punt” instead of making a real decision, and this of course led to a lot of confusion in the marketplace. However, there are a few things we can look at it this chart which lead us to believe that it is still trying to follow the larger patterns.
For example, the downtrend line just above is in fact a weekly downtrend line that forms the top of the descending triangle. This descending triangle suggests that the market is going to head back down towards the 1.28 level sooner or later, so on a break of the lows for the session on Wednesday, we are more than willing to start selling Euros at that point. However, there is plenty of noise below there all the way down to the 1.30 handle, so choppiness will more than likely be a mainstay in this market going forward.
On the upside, it’s very difficult to think that trade unless we get a daily close above the weekly downtrend line. You can see that during the Wednesday session the market stopped right at that downtrend line, so it shows just how resistant it really is. Going forward, if we did close above that, we believe that this market would go much, much higher. In fact, this would almost lead to a massive Euro bull market. This would more than likely have implications against several Euro crosses. Because of this, this is a very important pair to watch at this moment in time, but even with the positive finish for the day, we don’t necessarily get excited about the scandal as it did not years with such obvious resistance.
Even if we get a breakdown though the choppiness would probably best be held off by longer-term traders. Whether or not we get through 1.28 is another question altogether, but it does look like the market is setting up to do so eventually. If it does, expect to see 1.22 before it’s all said and done.
Written by FX Empire