The EUR/USD pair initially fell during the session on Tuesday, two fall back below the 1.35 handle. However, by the end of the session we saw the market rise above the 1.35 handle, signifying that we may possibly make a move towards higher levels, but I recognize the fact that the 1.36 level is the top of resistance, and as a result I think it's difficult to buy at this point even though we managed to break the top of the shooting star from the previous session.
With that being said, I do believe that a resistive candle could offer a nice selling opportunity still, even though the market does look like it's trying to go higher. This of course is going to be based upon whether or not there are expectations of tapering off of quantitative easing on the part of the Americans, or what the ECB is going to do going forward. After all, they did just have a surprise rate cut, but the question then remains whether or not they can do anything further as far as listening monetary policy. Right now, it does not seem that they are ready to do so, that of course has money flying back into the Euro, as it may have been oversold.
1.36 Leads the Way to 1.38.
If we can get a daily close above the 1.36 handle, I believe that this market will head straight towards 1.38 handle without too many issues. After all, there really isn't much in the way of clustering between 1.36 and 1.38, and because of that it should be relatively quick move. If we can get above the 1.38 handle, I believe the 1.40 will be targeted longer-term as it is a large number.
If we managed to break down below the bottom of the shooting star from the Monday session that would in my opinion leave this market to the 1.33 handle, which of course was massive resistance previously. In fact, it was so supportive that's where we bounced after the surprise rate cut, showing just how strong that area could eventually prove to be.
