By: DailyForex.com
The EUR/USD pair rose during the Friday session in order to test the 1.30 level again. However, as you can see by the chart it not only failed, but formed a shooting star in order to attract more possible sellers.
This market is without a doubt one of the most confounding ones to traders at the moment. We've seen a nice rally based upon a whole lot of hope, but very few details. This has been the case for the Euro for quite some time now, and it is astonishing to me that the promises of doing something rather vague is enough to keep pushing this currency higher.
However, as you can tell by the chart I am starting to see the possibility of a descending triangle. The 1.30 level seems to be far too resistive for the pair to stay above for any great length of time, and truthfully I see noise going all the way to the 1.35 area. Because of this, I believe that this pair will continue to struggle to keep its gains for much longer.
Adding to all of this analysis is the fact that we are approaching a trend line that keeps propelling this pair higher. Once this trend line gives, the next site for support would be the bottom of the potential triangle which I am calling the 1.28 handle. On a daily close below that level, I would not hesitate to sell the Euro, and would probably do so rather aggressively.
Headline Event
While I certainly don't know what will be the catalyst to start the Euro selloff again, for me we are certainly in an area that invites this type of move. It will certainly be some type of headline event that gets the markets moving. The biggest problem of course is the fact that we don't know what's coming, and there are so many potential dangers out there right now.
My suspicion is that the European debt crisis will remain much like it's been over the last year and a half. What I mean by this is that there will be new surprises, and that is probably was going to send this pair down. After all, at one point in time it was just going to be Greece that was the problem. And then came Ireland, Portugal, Spain, and Italy. While not all of these countries are as much trouble as the other ones, we have to ask questions of Belgium as well. With this in mind, it's not a hard stretch of the imagination to imagine a headline that pushes this currency pair back down.