The EUR/USD pair attempted to gain in value during the session on Monday, but was pushed back yet again. It now looks as if the 1.30 level will not only be resistance and the traditional horizontal sense, but we are now starting to get enough resistance to make what could be the beginning of a triangle.
This pair certainly is one that has move quite a bit over the last several months, and as such taking a rest is in a huge surprise. However, this currency pair can go sideways forever and I believe that we will be seen a move fairly soon.
Another thing that has now, it tension is the fact that the 1.28 level is more important than ever. It now looks as if the area is the bottom support level for the current action, and as such with the descending trend line above, we could be forming a different type of triangle in the form of a descending triangle. So essentially, I see two potential triangle's going on at the same time.
Breaking Two Levels
The reason that I am much more interested in a sell position in this market is because I won't do it until we get below the 1.28 handle. If this happens, this will be a breaking of the uptrend line, as well as the horizontal support at the 1.28 level. At this point time, I would think that most people would be aware that something has fundamentally changed in this pair.
This is one of my favorite ways to trade, simply trying to match as many scenarios as possible at the same time. In this particular set up, you would have people trading this pair because of the descending triangle that has broken, the horizontal support that has broken, and the uptrend line that has been broken as well. This will include a lot of different traders, and as such should give some real momentum to this move.
However, there is always the possibility of a move higher. I am not as easily swayed to buy this currency pair, simply because I see far too much noise between 1.30 and 1.35. I'm not saying that this couldn't continue higher, just that it will be a difficult trade to take. If I choose to buy the Euro for any reason, I will most certainly do it against another currency pair such as the Japanese yen, which has a much clear path higher.