By: Christopher Lewis
The EUR/USD pair had a fairly quiet session considering how important Wednesday was supposed to be for the overall direction of the US dollar. There were various concerns in the stock markets about the fact that the Federal Reserve could go on without further easing, and as a result this would have been good for the Dollar, and bad for stocks. However, with the Fed on Wednesday, we got a little bit of everything, yet nothing at all when it was all said and done.
The statement came out and failed to mention anything about the possibility of quantitative easing. This sent the Dollar higher overall, and not just in this market. The rally in the USD was fairly short lived though, as the news conference two hours later saw Mr. Bernanke suggest that the Fed was willing to use whatever tools necessary in order to help the economy along. In essence, it looks as if quantitative easing is still a possibility, but not just at this point.
This essentially whipped the markets around, but as the session came to a close – most things had only made marginal moves. It is in this light that I find myself looking at the big picture again as the Fed disappointed everyone at once on Wednesday.
I still see a triangle
The larger picture is the only one I can look at, and certainly the Wednesday session gave me little in the way of new information. After all, it isn’t exactly a massive shock to think the Federal Reserve would step into the situation if the economy starts to falter.
.png "EUR/USD Daily 42612")
The chart still looks to me like a pair that is trying to form a descending triangle. I see the 1.30 level as the key to the whole market, and a daily close below that has me selling rather aggressively. The downtrend line of the potential triangle lines up with the 1.3250 area, a place where we have seen reactions in this pair mainly. Because of this, I am selling any signs of weakness in that region as well. I am not going long of this pair until the market closes above the 1.35 level on the daily chart.