EUR/USD rose during the session on Thursday as we bounced off of the trend line that has been holding this market up since the early part of July. The Euro is one of my least favorite currencies, and as such I haven't been participating in this move higher. I will admit it's been very difficult to watch, but it the end of the day you can only take trades that make you feel comfortable. Otherwise, trades that are uncomfortable tend to end up being bad trades.
The most recent action hasn't been as convincing as the last several months, and as such I think the 1.30 level is the beginning of serious resistance. We clearly have made a lower high recently, but have failed to make a lower low. A break of the trend line of course would do that, and a break of the 1.28 level would confirm it. If this happens, I would not only be short this pair, but I would be aggressively short despair.
The European Finance Ministers seem to accomplish very little during the meetings this week, and as such I am a bit surprised to see the Euro rise. Also, it should be noted that Spain was downgraded yet again, and we had a hardly a reaction at all. However, I do see how the trend line is the key to this whole thing.
Trade on the side of the line
You need to be on the right side of this trend line. If you find the prices above it, you simply can't sell this pair. Trust me, I really want to but I know better. However, we break down through this trend line that would suggest that something has changed in the mind of the buyers, and this of course is a great signal to start selling.
Simply put, I am going to fall this trend line. If we break below it, I will start selling. As for buying, I see far too much noise ahead and would be hesitant to do it until we broke the most recent high which was a shooting star that sat right on the 1.30 level.