The EUR/USD pair initially sold off during the session on Wednesday, but bounced enough to form a bit of a hammer. With this being the case, I think that the market is getting ready to bounce a bit as it has been forming something that could be considered a bit of a base over the last four or five sessions.
The hammer does suggest to me that we will see the bounce go over the next couple of days, but I think ultimately any rally in this market would have to be sold. I see the 1.30 level looking as very resistive, and this is further punctuated by the massive right candle that we saw form about eight sessions to go. With that being the case, I like the idea of fading rallies when they do happen.
I will be looking for resistive looking candles on the shorter-term frames in order to start selling this market again. We have a meeting today from the European Central Bank, and this of course will have an effect on this market. My suspicion is that any type of knee-jerk reaction that is positive for the Euro will more than likely be countered once the dust settles. Because of this, I think patients will be the order of the day, and I will more than likely stay out of the market until after that central bank announcement.
Follow the trend, it does point lower
I hate the Euro in general. This is one of those currencies that no matter what happens, the market seems willing to give it more slack than it deserves. As we have seen several times before, it seems that every time this currency is on its deathbed, there is some reason to start buying it suddenly. This of course gets turned around as soon as people start to focus on the realities on the continent, and as a result it tends to be very volatile. A pullback at this point time isn't necessarily out of the question, and as a result I fully expect see 1.30 tested. However, I do not expect see the market go above that area anytime soon.
