The EUR/USD pair rose during the session again on Wednesday, but found the 1.35 level as being far too resistive to overcome. The resulting action formed a beautiful looking shooting star, and at the exact spot you want to see it. Because of this, I feel that this pair is ready to start following again, but I don't expect some major move out of this, rather I expect a bit of a pullback as we await the G 20 meeting later this week.
The Euro has been a source of problems for the European Union lately, as the high valuation of this currency starts to put a strain on the economy that is already somewhat recessionary. With exports being too expensive, other countries are starting to buy from other places like the United States. As the ECB has entered the "currency war", we now begin to see whether or not the Europeans can control the valuation of their currency against a true professional devaluation juggernaut like the Federal Reserve.
A tale of two central banks
This is essentially a battle between two central banks that are both trying to devalue their currency. The Europeans will lose eventually, because nobody knows how to print like the Federal Reserve. However, this doesn't mean that there won't be pullbacks from time to time. I still think that the momentum is to the upside in this pair, but we could be entering a cooling phase, and of course would slow the ascension.
If the bottom of the shooting star gets broken to the downside, there is a possibility that we see a move down the 1.3250 before too long, but I think this will essentially end up being a buying opportunity by the time it's all said and done. If you are a short term trader, possibly selling this could be done, but instead I prefer to buy either the pullback that shows signs of support, or a break of the top of the shooting star which of course shows momentum picking back up. For myself, I simply will not sell this pair at the moment as I believe there's far too much bullishness underneath.