The EUR/USD pair try to rally during the session on Tuesday, but as you can see the 1.38 level has offered resistance yet again. This has been the top of the consolidation area for some time, and it now appears that the downtrend line that has formed the top of the negative channel since the financial crisis is starting to come into play. I believe currently that it is somewhere near the 1.39 handle, so therefore there will be a significant amount of selling pressure.
The biggest problem of course is the fact that there is a significant amount of support below, as well as mass confusion. With the problems in the Crimea, the US dollar could very easily get a bit of a bid against the Euro. Because of this, I believe that ultimately this market will continue to grind back and forth, but I am very cognizant of the fact that a move above the 1.39 level would be massive in its implications.
Long-term move coming up.
I believe that we are going to see a significant move in this pair eventually, and based upon the longer-term charts, it very well could be to the downside. Of course, the Euro seems to have some type of lifeline every time things look dire, so I certainly wouldn’t place any money at risk right now. However, the 1.39 level is probably the easiest signal that we get. If we don’t get above there, I believe that we do drift lower, but it will continue to chop as it has for the last several years. This really is one of the situations where you have to play this chart long-term if you’re going to play it at all. Otherwise, you are simply looking for some type of short-term scalping opportunity, something that is very difficult to do in this market right now.
I believe that ultimately this market will play its hand soon, but at the moment I am on the sidelines waiting for some type of obvious signal. The reason I can wait for that obvious signal, is the fact that I believe it will determine the next 1000 pips when it comes.
