The EUR/USD pair tried to rally during the session on Monday, and did in fact crack above the 1.36 handle, but as you can see failed miserably and pulled back to form a shooting star. This shooting star of course suggests that the market is going to fall from here, and perhaps entertain the idea of heading back towards the 1.35 handle. This would not surprise us at all, simply because the market looks like it wants to consolidate overall anyway.
We have been wrestling with the idea of whether the Federal Reserve will taper off of quantitative easing anytime soon, something that we do not expect to happen. However, it’s obvious that the markets are exactly convinced one way or the other, at least not decisively, and as a result it looks like the Euro which is also known as the “anti-dollar” will continue to be a bit confused at this point.
Going forward though, a break above the top of the shooting star is a nice buy signal as it would show significant resistance being broken through. On the other hand, if we do get below current levels, and find support somewhere close to the 1.350 level, we feel that this market could very easily bounce from their and continue to tread water back and forth in a 100 PIP range, which of course makes short-term traders happy.
That being said, we think that focusing on the short term charts will more than likely be the way to go over the next several sessions, possibly even the next week or two. However, we think that once we get above the 1.36 level on a daily close that does signify that we are getting ready to enter the next phase higher. This market without a doubt does have a bullish tone to it, and it appears to us that we have simply been going sideways after having a nice strong move higher, which of course is typical in an uptrend as we can go in one direction for very long without at least having some type of pullback.
Written by FX Empire