EUR/USD had an interesting session on Wednesday as the market originally sold the Euro off and push the pair down to the 1.23 level. However, by the end of the day we saw a bit of a rally which formed a hammer. This suggests that perhaps there is a little bit more to this rally at this point in time, however I am not overly excited about it mainly because of the shooting star at the day before.
Typically when we see a hammer and a shooting star within two candles, this means that we are going to see consolidation. This would make sense, as the area above has nothing but noise in till we get to the 1.27 level. Granted, the 1.25 level is the one that will get most of the attention, but it cannot be said that the Euro is going to have an easy time getting above the 1.27 as there are so many different areas can cause problems at this point in time.
Messy
If there was one word that I can use to describe the EUR/USD pair at the moment, it would be "Messy." This market simply looks like one that is driving itself based upon a motion, and that certainly would make sense as we have seen how headlines can completely reverse a strong move in one direction or the other. I still favor selling this market overall, and I do see that there is a big opportunity for shorting this market over the next 300 pips or so.
I know that this seems like a large area to be concerned about, but I have seen time and time again when the market is focused on one that specific pair most of the time, it will often make these large areas. This makes trading very difficult, and the best thing to do is follow will the overall sentiment.
A lot of people will tell you that you should "go against the herd." There are plenty of people out there talking about buying this pair at the moment, as they see the ECB coming in to save the day. This is utter nonsense, as those people who were going against the herd are simply trying to fight the market. You need other traders in order to push the market in the direction that you need to make profits. Been the sole person fighting the market is no fun, and certainly nothing that I plan on being a part of. In the meantime, I am more than willing to be patient and sell on signs of weakness as we go along.
I simply look at this market gaining as me getting the US dollar on sale once I get the weak candle that I'm looking for.
