The EUR/USD pair had an interesting session on Thursday as we poked above the 1.35 handle, but found ourselves coming back and forming a shooting star. This shooting star of course suggests that we are going to go lower, but we don’t necessarily look at this and the selling opportunity, rather that a sign that a pullback is coming. After all, if the Federal Reserve is not going to taper off of quantitative easing, that the markets by quite a surprise. That’s a price should continue to push the value of the euro, or more importantly the value of the dollar down.
We think that this area could push the market back down, but we fully expect to see support at the 1.34 area. Because of this, we think that supportive candles will be bought, and probably are the best way to go about trading this market. It may just be a matter that the Euro got a little ahead of itself and this is why we are seeing this resistive candle at the moment.
A break of the top of this shooting star of course is very bullish sign and would have us going long this market probably aiming for the 1.40 handle over the course of the next couple of weeks. However, that of course is the more dangerous trade as it would show that the markets are getting a little bit parabolic. Parabolic markets of course are very dangerous, and because of that we are very hesitant to buy on a breakout to the upside. Granted, we could but it’s a bit dangerous to say the least.
The markets will course be headline driven still, and because of that you can expect a lot of volatility going forward. However, we do think that the Euro will continue to do better than the Dollar overall, and because of that we are more than willing to buy the dips as they appear, and show signs of support over the course of the next several weeks. There is no situation at this moment time where we are willing to sell.
Written by FX Empire