EUR/USD attempted to rally during the Tuesday session, but was left wanting to say the least. The candle at the end of the day looks like a shooting star, and the only thing that looks like support at this point in time is the fact that the Monday session was a hammer. In fact, it looks like the 1.23 level is about the only thing holding this market right now.
You can only live on rumors and innuendo for so long. Only so many promises can be broken, and in a crisis, you simply must move quickly. This seems to be something that the higher ups in Europe simply do not understand. Unfortunately, the markets that allow them to do this, and we seem to be in a bit of a cycle. However, it's almost impossible to look at this market in not understand that every time it rallies it is simply an opportunity to sell from higher prices.
Massive resistance ahead
Looking at this chart, it is obvious to me that there is a lot of noise all the way up to the 1.27 level. With this in mind, it's hard to imagine a situation where this market goes through all of this resistance. In reality, the only way it does is if the Europeans suddenly get serious about the situation in their debt markets. As a side note, the space a year bond rose 13 ticks for the session, signaling that the market is about to start focusing on Europe again.
Looking at the chart, I see an easy route down the 1.20 on a bad headline. There are far too many issues in Europe think that about headline isn't coming, and the fact that the hammer from Monday sits quite nicely on the 1.23 level, it becomes increasingly clear to me that the handle needs to be cleared to the downside in order to begin selling again. Adding to the bearish pressure, the 61.8% Fibonacci level is exactly where we stopped during the Tuesday session.
Quite frankly, I'm fine with this pair rallying a little bit higher. It will only make the US dollar cheaper to buy, and therefore expand profits. However, after the Tuesday price action, I don't know for going to see this market climb much further.
