By: DailyForex.com
The EUR/USD pair fell rather hard during the session on Tuesday, breaking the bottom of the shooting star that had formed on Friday. I had suggested that this pair would in fact do that, and I have already seen the fruits of that move. However, what I find interesting is that we could possibly be forming some type of bearish flag at this point.
The biggest problem of course is the fact that the 1.28 level begins significant support in this marketplace, and the Euro seems to have at least nine lives, if not 2764. Because of this, it is difficult to short the Euro for any length of time, and it should be noted that this area is significantly supportive on the longer-term charts as well. This is why I actually am going to stop shorting this pair, and look for support below.
I know it sounds cynical, but I think this pair simply can't be broken. I could be wrong of course, and would be more than willing to follow once that happens. But in reality, I cannot tell you have any times my friends and I have seen the Euro bounce for no apparent reason. Because of this I know that most of my friends are willing to sit out into we break below the 1.27 level.
Range bound
I think that we are carving out the summer range at the moment. I believe that the summer will see this market bounce around between roughly 1.28, and roughly 1.32 on the top. I don't know that we can get out of this area, and it is possible - bonds as we enter the summer there will be less and less interested in trading currencies, and more and more interest in hanging out at the beach by the large money movers in this marketplace. Not all summers are quiet, but recently I have to admit that I've seen a lack of interest by a lot of traders that I know in trading this particular market. Because of this, I am on the sidelines but willing to sell again if we get below 1.27, or buy if we get above the 1.30 handle.
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