The EUR/USD pair tried to rally during the session on Tuesday, but as you can see giveback about half of the gains in order to form something along the lines of the shooting star. While this is a somewhat bearish candle, and a bit hesitant to start shorting simply because we are sitting right at the 1.38 handle, an area that has been resistive in the past. Typically, if the resistance was so significant, the support should be as well.
On top of that, I see a significant amount of noise all the way down to the 1.37 handle. With that being the case, it’s almost impossible to get overly excited about selling at this point, and I believe that we would have a hard time finding decent moves between here and there. It isn’t that I think that the market can’t fall down to that level, just that it isn’t going to be easy.
Choppiness – again.
The market should continue to chop around for the near term, but in the end the markets will continue to be a difficult place to place trades. The upside could be hit, and as a result the market could continue to go higher, but the wicks from the recent candles would have to be overcome in order to start buying. The markets could be looking for the 1.39 level or so. I believe that the markets will more than likely try to break above the 1.40 as a result, which would overcome the longer-term downtrend line that is from the monthly charts, starting at the beginning of the financial crisis. The breaking of this downtrend line would be the beginning of a longer-term “buy and hold” situation, which is the way things used to be back in the “old days”, when it was a simple matter of shorting the US dollar.
The reality is that the markets will probably do neither – and simply grind back and forth. Short term traders continue to dominate the market. With that – I don’t really have an opinion, but wish this market would make up its mind….
