The EUR/USD pair had a fairly wide range during the Wednesday session, but officially closed at the 1.34 level. We went back and forth and decided almost nothing. This is because the pair is currently consolidating between the 1.3250 and 1.33 levels. With this in mind, this is a short-term traders market at the moment.
Because of this, I have been a bit hesitant to be involved in this market as I see it as being far too choppy. However, there is a certain amount of wisdom to simply bonding and 1.3250 and selling at 1.34 or so. However, I do think that eventually we will breakout to the upside. When that happens, this should open the door to the 1.35 level, it is there that things get very interesting.
Inverse head and shoulders
On the longer-term charts, a break above the 1.35 level would signify a break of the neckline for an inverse head and shoulders. This actually leads to a 1.50 target. I am well known as being very bearish on the Euro, but this is what the technical analysis tells me. I guess it really doesn't matter what I "think", only what the market does.
Looking at this chart, there's certainly plenty of bullishness involved in a, but I do think that the next couple hundred pips are going to be difficult. Somewhere between 1.34 and 1.35 is a time of resistance that will have to be taken out in order for us to continue much higher. I think this happens eventually, but it is going to be a serious fight going forward. Because of this, many traders will lose a lot of money in this market as it continues to jump around and show extreme amounts of volatility.
Going forward, I would suggest that selling this pair is going to be very difficult to do as the 1.350 level is supported all the way down to the 1.32 level. Below there, I see quite a bit of strength of the 1.30 level that extends itself all the way up to 1.3050 roughly. Because of this, I actually prefer buying the dips when they come.