The EUR/USD pair fell during the session on Thursday as we initially tried to rally above the 1.30 level again. The fall after reaching that area formed a shooting star, which of course is always a bearish sign.
Looking at this overall chart, I cannot help but feel that we are in a bit of a "no man's land" type of situation. I think that the 1.28 level is massive support, while the 1.3150 is resistance. In fact, I believe that the resistance extends all the way to the 1.35 level based upon the descending triangle that sent the pair lower several months ago.
Because of this, I think this is going to continue to be a choppy marketplace which of course is something that I do not prefer to trade in. Because of this, I quite frankly stopped trading this pair for the time being, it is simply isn't worth the hassle. This doesn't mean that I don't pay attention to it, far from it. Understanding what the Euro is going in relation to the US dollar during any particular session can greatly influence other trades as well.
What was once the most important pair becomes an indicator
I basically treat this currency pair as an indicator at this point in time. It's a "risk on, risk off" type of indicator the works fairly well. You can see that the markets have generally been grinding sideways for the last two months, with a slightly upward bias. This is reflected in that currency markets, stock markets, and other risk related assets.
With this in mind, I believe the clearest path is certainly to the downside. However, I will not be involved unless I see some type of breakdown. The 1.28 level is where I begin to aggressively short this pair. If we don't get below it, I think that we can in fact reach 1.35, but it will be a very bumpy road higher.
I learned a long time ago that the EUR/USD pair isn't the only one. A lot of Forex traders get hung up on this particular pair, and I suppose that it is because it is normally only a 2 pip spread or even less. This is a horrible reason to be involved with the currency pair, as the difference between a 2 or 3 pip spread isn’t enough to change how the market is going to behave. For the time being, I have no interest in this pair.