By: Christopher Lewis
The EUR/USD pair continues to grind around just below a resistance area as the concerns in the European Union are fading into the background of the collective mindset of traders. The recent action suggests that the debt crisis in Europe is no longer in the forefront, and as a result traders are willing to look towards other variables.
However, the debt crisis in Europe is far from over. The Portuguese and Spanish bonds markets have been showing signs of stress again, and as these markets are often harbingers of things to come, I find it difficult to buy this pair at the moment, even though the action has been supportive over the last week or two.
1.3250 to 1.33
I see the resistance area as being all the way up to the 1.33 level, and starting at the 1.3250 mark. We are presently sitting in the middle of that, and I believe that it could slow this pair down a bit. The recent action showed a hammer on Thursday, followed by a move up on Friday, a classic buy signal as it shows a continuation of the bulls changing the momentum to the upside. However, the area has seen multiple attempts at a move higher, and the one break that we did get was promptly turned away at the 1.35 level above. Because of this, I think the level is probably backed up by the action above as well.
With this in mind, I simply cannot buy this pair, even if we get the needed push higher for the bulls. I think with all of the possible bearish events just waiting to happen, I prefer to see weakness above in which to sell this pair. The 1.33 level could produce it, or we could see it closer to the 1.35 level. Quite frankly, if we bounce it is all the better as it gives me a chance to sell it at higher prices.
.png "EUR/USD Daily 3/26/12")
The 1.30 level below should continue to be supportive, and as such I think any move down will be slowed by that area. If I find myself down there with profit I will have to be somewhat careful as the bulls are relentless at times when it comes to the Euro. In the event of a daily close above the 1.35 level, I would have to admit defeat and look at buying.