The EUR/USD pair has been grinding higher over the summer as the volumes have dwindled. Now that we are starting to get many of the larger trading firms back online with full volumes, we have seen a bit of a letdown in the bullishness of the Euro. We are currently at a loggerhead of sorts as the area that I have been mentioning over the last several weeks is being tested.
If you have been listening to my videos and reading these reports, you know that I find the 1.27 level as a massive resistance area for this currency pair. In fact, if we can get above the 1.27 level, I would be more than willing to become suddenly bullish of the Euro - at least until the 1.30 handle.
The pair is currently trading within the massive resistance area that I called for between the 1.24 and 1.27 levels, and as a result I have been on the sidelines. The price action has been pretty impressive, but I have never been able to get past the point that the European Union is an absolute mess.
Shooting star
The daily candle for the Tuesday session formed a shooting star, and as a result it looks to me like we are finally running into the serious resistance that I expected. If we manage to break the bottom of the Tuesday session, I suspect that we will return to the 1.25 level. However, there is a much bigger trade to be made if we can get below the 1.2450 level as I believe that opens the door to massive selling in this currency pair and a return to near the 1.20 handle.
The next couple of weeks will be vital when it comes to the direction of the Euro, and as such I figure that there will be plenty of volatility in which to trade this pair, but holding onto a trade will be difficult until we get a resolution of the ECB meeting, the Dutch elections, the German High Court ruling, and various bond issues. The short term will be very volatile, but as long as we can stay underneath the 1.27 handle, I am short of this pair if I'm involved at all.
