The EUR/USD pair continued to be a troublesome pair to trade on Thursday as the markets simply cannot sit still or even pick one direction for any real length of time. The pair has a recent history of whipping trading accounts around, and the last couple of sessions are the first signs of some semblance of a trend forming.
The pair had recently been one that seemed to float under the most ridiculous conditions. The headlines out of Europe are almost constantly negative, yet the pair just wouldn’t fall. There have been hints of weakness before, as the descending triangle suggested. The highs have been getting lower and lower, and the breaking of the 1.30 level was my biggest wish for clarity. Luckily, the gap over the weekend started the process to finally cause some kind of decision, and now I am even more confident in the direction of this market.
The Euro is starting to look more and more like a flawed concept. Many analysts have been glossing over the whole issue: You have far too many economies, cultures, and general attitudes under one roof in this currency. And in some kind of idiocy, the European Union is still trying to expand at breakneck pace. It would be hard for me to imagine the Canadians and Americans using one currency, and those two countries are very similar. (Except Quebec, which quite frankly should be its own country as well.)
Shooting Star
The Thursday session has produced a weak attempt at a rally in favor of the Euro, but as you can see completely failed. The top of the range is just under the 1.30 level, which was the massive support that we saw previously. The fact that it kept price below, this suggests that it is now resistance – something that would be expected.
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The breaking of the bottom of the shooting star suggests a further move lower, and the reality is that the triangle breaking down already suggests that the 1.25 level is the final target. The 1.26 level is a potential support level as well, and even with that – this pair will bounce on little ideas of “hopium” along the way. None the less, I am short of this pair, and will continue to be. Buying isn’t even a thought.