The EUR/USD pair has been sold off rather ruthlessly over the last several weeks. The pair has been the center of the concerns over the last several weeks, and with all of the drama in Europe is isn’t much of a surprise. It seems that the situation in the European Union continues to deteriorate; there are plenty of rumors on possible bailouts and bank funds from which to draw. In other words – the usual “hopium” fueled market moves.
The pair will more than likely struggle above the 1.25 level though as the four shooting stars that previous formed at the area suggests that we could have a hard time breaking out. The fact that Ben Bernanke is appearing before Congress suggests that the markets will be watching him for any clues as to the thoughts on quantitative easing by the Federal Reserve currently. Any hints or explicit remarks by the Chairman will send the Dollar much lower. However, if he doesn’t mention it, there is a real chance this pair falls apart. In fact, we almost look as if we are simply waiting for the remarks at this point.
1.25 And four shooting stars
The 1.25 level should continue to offer significant resistance, and as a result I am looking to see if I get a weak candle in this area. The breakout above that level will more than likely have issues at the 1.28 level as well.
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The headline risks out there certainly are working against the Euro at the moment, so going long of this pair is going to be a nerve racking proposition. The selling of this pair is going to be my bias, and as a result I am looking to fade these rallies as they happen. The breaking below of the recent lows we have made will have us selling aggressively. The failure of bullish momentum to continue at the 1.26 and 1.28 levels will for me to buy, but in the meantime I am looking to sell rallies as they appear, and sell a breakdown below the lows – and aggressively so.