The EUR/USD pair initially fell during the session on Wednesday, but as you can see bounced enough in order to form a hammer, suggestion that there is support below. This market is finding its way up to the 1.35 handle though, which of course is very resistive and as a result I feel that this market may have trouble going much higher. In fact, I am looking for resistance all the way to the 1.36 handle, and because of that a simple resistive candle is all I need to start selling.
With that being the case, I look at resistive candles as invitation to sell but I also recognize the fact that the hammers that we have formed of the last couple of days will make sure that this move back down will be choppy. With that being what we are looking at, we could also begin to see consolidation between the 1.33 handle on the bottom, and the 1.36 handle on the top. After all, there are a lot of moving pieces right now that it certainly got the markets confused.
Surprise rate cut and employment numbers out of America.
The ECB cut rates last week, shocking the market. This of course is negative for the Euro, and does suggest that the European Union is perhaps slowing down again. That should work against the value of the Euro overall, and the fact that the employment numbers out of the United States are improving suggests that perhaps the US dollar should continue to go higher as well, driving this pair down. However, there are a lot of questions and we are nowhere near the Federal Reserve cutting back on quantitative easing yet, so although it still a distinct possibility, I do not think that this market is going to make any significant headway in either direction in the short term. In other words, the aforementioned consolidation range might be exactly what we find ourselves working with. However, I do believe that the resistance is a little bit worse than the support right now, so I am going with a negative bias in this pair.
