By; DailyForex.com
EUR/USD had a mildly bullish session on Monday as the selloff from the last three days will have undoubtedly been considered to be a bit over done by many in the Forex markets. While this is undoubtedly true, this chart does suggest the old adage, "the trend is your friend" is absolutely spot on. In fact, it is because of that I believe selling this market is the only thing possible.
The 1.23 level has been held for the time being buying the bulls, but the reality is that the markets are waiting to find out what the Europeans decide at this week's meeting. It's a bit of a stretch to consider that something constructive will happen, and even if it does there is a strong chance that the market will simply faded anyways. After all, Mario Draghi has even stated that the Europeans are "moving as fast as they can." Unfortunately for them, the markets aren't that patient. I have to admit, like most people I have been astonished that the markets have been as patient with the Europeans as they have already.
Retest?
Now that we have broken below the 1.2350 level that offered so much support, the question is now whether or not the Monday action was simply a retest of the lows. What was once support will become resistance, and this could be what we’re seeing. Nonetheless, you have to keep in mind that the pair fell almost 400 pips last week and that a bounce isn't necessarily out of the question.
The bounce from the 1.23 level will undoubtedly serve as a chance for me to sell this pair from higher levels. This is something that I welcome, and the relatively light schedule of news events over the next couple of days may offer a better rest fight for the Euro. Because of this, I suspect that towards the middle to end of the week I will be selling this pair on a weak candle. As things stand now, I am willing to sell at 1.2350, 1.25, and 1.27 if we get any signs of weakness at that point in time. As for buying, I simply won't do it.