The EUR/USD pair rose during the session on Friday, but as you can see a back about half of the gains. This is unfortunate, because it shows that the market is simply going to stay within the really tight consolidation area that we have been stuck in for some time. With that, I have no real interest in trading this pair, but do recognize of that we are going to have to make some type of decision sooner or later.
There is a downtrend line off the monthly chart that’s just above at roughly the 1.39 area, so there is a possibility that it could come into play sometime soon. That downtrend line extends all the way down from the beginning of the financial crisis, so of course it is very interesting to me. I think that a failure just above could send this pair back down but more importantly a breakout just above could make this a longer-term buy-and-hold type of market, just as it was for several years before the crisis.
Still looking at choppiness.
Unfortunately, I believe that this market is going to continue to chop around in a relatively tight range, and a longer-term moves are not likely anytime soon. The market continues to be the domain of short-term traders, and as a result it’s difficult to get involved in this market for anything more than a few pips at a time. However, I know that a lot of the newer traders will be tempted to get involved and lever up their positions. After all, a lot of new traders figure that they can get 10pips, and if those 10 pips are worth a lot of money, they’re on their way. Unfortunately, it doesn’t work that way as you will blow your account up rather quickly. I fear that the EUR/USD pair has been doing that to a lot of new traders recently. After all, when there’s no direction, everybody gets what they want, assuming they know what that is. Most people don’t, so therefore they just run around in circles.
