By: Christopher Lewis
The EUR/USD pair has been waiting for the Thursday session for most of the week as far as I can tell. Once the big day came, we really didn’t have a lot of answers on the debt issues. The Spanish managed to unload their two and ten year bonds, but had to pay a larger than expected rate to do so. In short, there was demand, but at a price. Also, one must understand that the Spanish banks are pretty much forced to be involved, so it is hard to tell the truth in this kind of environment.
The action for the session was back and forth, but at the end of the day – it has to be said that the bearish action failed to break the bottom of the Wednesday session’s lows. The reason this matters is that the candle for the Wednesday session was a hammer, and breaking the bottom of one of those candlesticks is by far one of the most bearish signs in the markets. The fact that the bottom of the range held up is a bit telling at this point.
1.30 – still
For the bears, the 1.30 mark is everything. This level simply has to give way in order for them to get their way, and it must be said that it is holding up in an extraordinary manner. The bounce that we are currently involved in probably isn’t a big surprise, but the last 48 hours has been very bullish – or at least anti-bearish.
The candle for the session ended up being a hammer-like candle, and although I don’t find it particularly attractive, it has to be said that there is support. Also, there is simply no real headway being made on breaking below the 1.30 level. Because of this, I feel that we are going to bounce from this point. None the less, I still prefer selling – but only after a bit of a rally. Look for the 200 day EMA to hold prices down as well. First sign of weakness on a 4 hour or more candle, and I will be selling as there are far too many issues left to resolve in the EU.
