EUR/USD had a fairly eventful session on Tuesday, as it originally fell only to turn around and pop much higher. While we haven't made a new high yet, it does show a certain amount of resilience of the 1.25 level. This pair has essentially been defying gravity lately, and as such it has been very difficult for me to go long.
At this moment in time, I see this as a pair that is caught in an up trending channel. Because the market is towards the top of this range, I still feel that buying isn't going to be in my best interest. Also, when you look at the charts you can see that there is quite a bit of noise in the market until you get to the 1.27 handle. With this in mind, it's very easy to imagine a sudden headline slowing down the buyers somewhere between here and that aforementioned 1.27 level.
The candle does look very positive though, and as such it's difficult to sell at this point. I simply feel that it's only a matter time before we get that sell signal, and as such I think that we will see a weak candle sooner or later. Once that appears, I will not hesitate to sell.
1.27
Once we get over the 1.27 level, I am more than willing to admit that it is time to look at this as a new uptrend. In the meantime though, there simply far too many headline risk out there for me to be confident enough to go long. Yes, there has been a nice move higher over the last several weeks, but it also should be said that we are at the end of the summertime - one of the lowest volume times of the year.
Because of this, we could see a sudden reversal in the month of September. This move is more than likely predicated upon the idea of the Federal Reserve going into more monetary easing, and the ECB possibly doing something of these in magnitude which of course they will more than likely disappoint on. Because of this, it really is a difficult market to trade. I will be watching it for the sell signal that I expect see, but have to be diligent enough to realize that the 1.27 level is where things change.