By: Christopher Lewis
At the open, the EUR/USD pair gapped up based upon – let me know if you have heard this before – a potential workaround for the Greek debt crisis. In theory, the Europeans are about to give the Greeks another handout, and this will in turn make everything alright again. Of course, this movie has played many times, and with the EU Finance Ministers meeting late Monday, the world has been waiting for that magic solution that is undoubtedly about to come out of Brussels. (Sarcasm intended.)
The pair has been held hostage by what is going on in Greece for so long, many traders will struggle to remember when the pair simply acted upon the typical technical and fundamental factors that most pairs do. The headlines have managed to push this pair around over the last several months, and as a result the pair has been one to trade in short time frames more than anything else. The biggest problem is that every time a headline comes out that moves the market in one direction, it is only a matter of time before another headline will come out to reverse the move. I have this sneaking suspicion that the EUR/USD pair has been the broker’s best friend over the last 6 months or so.
1.3250 Still Looms Large
The move has again stalled at the 1.3250 resistance area, aided by not only the conflicting rumors that are coming out about the meeting, but the fact that the Americans are off celebrating President’s Day, and as such the liquidity is very thin in the US session. The pair simply has run out of steam at this point in time.
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The 1.3250 area is also the 38% Fibonacci retracement of the latest large down move, and this area should continue to act as resistance. I see the area as being strong, and the “noise” associated with the area between there and 1.35 really has me doubting the buying of this pair. It isn’t that the pair can’t go higher, surely it can, but the fact is that the move will be choppy at best. The 1.34 area is the 50% retracement area and the start of that resistance area centered at the 1.35 handle. With this in mind, I am again looking for a weak candle to sell from the top of the current consolidation range. The 100 EMA is sitting just above as resistance as well, giving me yet another reason to be suspicious of the bullish scenario.