The EUR/USD pair rose during the session on Friday, to show even more strength. Quite frankly, I am a bit shocked that this market hasn't taken off considering how many hammers have been formed recently. After all, it's pretty rare when you see three hammers in a row, which we had last week. On top of that, the Thursday candle was a hammer as well and we broke the top of that, which of course is a classic buy signal as far as technical analysis is concerned.
The other thing that I see on this chart that seems to be pretty important is the downtrend line on the weekly chart. I suspect that the 1.33 area is roughly where the market is going to run into trouble, so what I believe is that the Euro is a buy here, but probably going to be a sell there. You will notice that the 1.28 handle is marked on this chart, and that is because it is a base for the larger the ascending triangle that this market is forming.
I believe we are a couple of weeks from a serious move
The entire Forex world right now is focused on whether or not the Federal Reserve will taper off of quantitative easing in the month of September. That is roughly the time we start to see the liquidity pick up in the Forex markets, so I think sometime around September 1 you should see a significant move in most Forex pairs, and this one looks like it's trying to set up for that. After all, anything between now and then could very easily be "noise" as the liquidity won't allow the markets to show their true intentions.
Going forward, I think that the shorter-term trader will certainly have an upward bias, but I wonder how many of the longer-term traders are looking at this ascending triangle in thinking that it's almost time to start selling again. My suspicion is that we have two speeds at the moment in this market, and both are fighting for dominance of the moment.