EUR/USD fell for almost all of the session on Tuesday as concerns about European debts continue. Adding to the negative outlook for Europe was the Italian prime minister saying in an offhanded way during the session that he could not rule out Italy needing to seek bailout funds. This is the first time that it has been suggested by anybody of any importance that we could need money, and of course the markets freaked as a result.
While it was mainly shown in the stock markets, the Euro of course did lose during the session as well. On an almost daily basis, I receive e-mails and messages asking why I am so bearish on the Euro. It's very difficult for me to explain that all it takes is one good look at the chart. It seems fairly simple, but there is always somebody willing to try to pick up at the very bottom. While this is the fantasy trading, it certainly isn't the reality. The fact is that you could get lucky and pick the bottom of the downtrend, but the odds of this are extremely small at best.
On the other hand, you can just simply follow the longer-term trend and find that your odds of success are better than 50% most of the time. That's really all that trading is: taking the best calculated risk. This is why people are so quick to repeat the phrase "The trend is your friend."
1.2250
The 1.2250 level has held as support over the last couple of sessions, and this is the area that I am watching with more interest than any other part on the chart. Granted, I do see that the pair has been sold off drastically over the last couple of sessions, but it can't be helped but notice that the Tuesday session retested the previous support and has failed. This chart by all means looks like one is going to continue lower. On that note, I am selling it yet again on a break of the lows from the Tuesday session.
