By: DailyForex.com
The EUR/USD pair went back and forth during the Monday session as we continue to try and price the fair value of the Euro now that we know that the ECB has no plans on cutting rates. With the move above the 1.33 level, I see that we are going to go much higher before it's all said and done. Ironically, we find ourselves in the midst of a massive resistance area, but the fact that we have seen such a surge higher leads me to believe that this area will eventually give way.
I see a move above the 1.35 level as monumental in this pair. This is because on the longer-term charts it would show the inverse head and shoulders over the last couple of years breaking the neckline that would lead to a move to the 1.50 level. I know this sounds a bit steep and hard to believe, but the truth is that if you've read my last report on the Euro, you would know that the pattern is not only there, but obvious as well.
Pullback
What I do want to see is a pullback. If we get a little bit of a pullback in season support somewhere near the 1.33 level, I would be very quick to start buying this pair. Since we have a Federal Reserve that is hell-bent on printing US dollars, I believe that this pair will continue higher over the long run. Looking at that, there's really no other way to go in this market but up.
I don't believe that selling this pair will be possible until we managed to break back below the 1.30 level again. This doesn't look very likely now, and as a result I don't think that I will be selling this pair anytime soon. In fact, I believe that a "buy on the pullbacks" type of strategy will be the way to go in this pair for the foreseeable future. I also believe that adding to your position on a break of every "handle" will be the way to go over the next several months if not years.