The EUR/USD pair seems to have gotten the rumor bug again. This time, there is a lot of chatter about a possible European banking bailout system coming. The LTRO was the first incarnation of this and by most accounts wasn’t very successful. However, one thing that I have learned about the EUR/USD pair is that it naturally wants to go higher, and on some of the most flimsy of reasons at times.
It is because of this that I have learned that there are times when trying to makes sense of it all is probably a lost cause. However, there are many headline risks out there at the moment, and because of this I simply cannot buy this pair at the moment. Also, I see a bit of a thick resistance “zone” above the 1.25 level that doesn’t get me overly excited about buying at this point anyways.
1.2550 – or so…..
The 1.25 level is an obvious resistance area, and the fact that the four shooting stars in a row formed just above the level a while back suggests that there will be a real fight at this level. It is because of this that I am actually looking to short this pair in the area if I get the right kind of bearish candle.
The headline risks out there are simply too numerous to list at the moment, and it really wouldn’t take much to get people disappointed again I fell. Also, the trend has been very bearish lately, and in all honesty – very little has changed at this point.
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This market is one of the worst as far as trying to “guess” what is happening next. What I mean by this is that it has a long pattern of buying on the “hopium” trade – when there is a slight chance of something happening, only to fall back down to reality when it becomes obvious that the situation in Europe is far from over. Because of this past, I think that we are about to enter another “fade the rally” set up. I will be looking for a bearish candle within the next 50 to 100 pips or so.