The EUR/USD pair tried to rally on Thursday, but found quite a bit of resistance above the 1.3650 level to turn back around and form a shooting star. The shooting star typically signifies bearishness, but I see quite a bit of support below, and therefore would not truly be interested in shorting this pair until we get below the 1.3550 level that I have marked on the chart, and quite frankly wouldn’t even be comfortable until perhaps even as low as the 1.35 handle being cleared to the downside.
This being the case, it is difficult to sell this market, but it’s not necessarily going to be easy to buy it either. After all, even if you break above the top of the shooting star which is typically a good buy signal to me, we have quite a bit of noise at the 1.3675 area extending all the way to the 1.37 handle. So much noise in such a short area typically makes it very difficult pair to trade, and the EUR/USD pair has been very difficult from time to time over the last couple of years. This looks to be business as usual.
Range bound
I believe that this pair is essentially range bound at the moment, and probably will remain so for some time. I would expect to see this pair try to go higher, but will more than likely find itself chopping around until it could eventually hit the 1.38 handle. Above there, resistance really comes into play, as evidenced by the large candle from a couple of weeks ago. Because of this, I think the market is essentially waiting for some kind of signal in one direction or the other from either the Federal Reserve and its outlook on tapering, or perhaps the concerns of deflationary headwinds in the European Union. Because of this, this is essentially a “lesser of two evils” type of currency pair of the moment, which always makes it very difficult to trade. Truthfully, I don’t see anything more than short-term scalps here and there in this pair, and I’m getting a lot of talk these days about high-frequency traders taking advantage of the tight spread in this currency pair. Perhaps this could be the new norm?
