The EUR/USD pair had a slightly will weak session during the day on Monday, as the initial rallies faded and failed to rise above the 1.25 level substantially. The real candle to pay attention to on this chart would be the shooting star from Thursday. This candle suggested that perhaps we were starting to run out of steam, and this would make sense as we were right in the middle of the massive resistance zone that extends to the 1.27 handle.
Looking at this pair, it there are several reasons I can come up with for it to fall. On the technical side, we are at the top of an up trending channel recently, and this suggests that we need to at the very least move sideways. Also, the shooting star that was mentioned above and the shooting star on Monday both say that this pair is running out of upward momentum at the moment. Adding to all of that is the fact that we have pullback to the 38.2% Fibonacci retracement level, and found resistance.
Uptrend line
If we manage to break the bottom of the shooting star for Monday, I do consider this a valid sell signal. However, there is an uptrend line that we will run into at roughly the 1.24 handle. If we get to that area and there is a bit of a bounce, I would be quick to take profits on any short positions that I have. However, if that level gives way and we manage to break the bottom of this uptrend line on a daily close, I think we could go much lower.
I've been looking for a move down to 1.15 for some time now, and I do not see anything on the chart yet that tells me otherwise. There was a daily flag that suggested this level, and many of the world’s leading traders suspect that we will move down to this level as well. Will it be a quick move? Probably not.
Looking forward, I do not buying this pair until we get above the 1.27 handle. As for selling, I will continue to do so over and over as the European Union is far from fixing its problems.
