The EUR/USD pair had a pretty rough session during the Monday trading day as the markets reacted to news of several Spanish territories needing a bailout in the near future. The market action was absolutely horrible most of the session, but as usual the Americans stepped in to save the day and kill off the Dollar.
The opening selling from the weekend, and as such it look like we were off to the races. However, it looks like there is going to be a bit of a fight at this point in time and we should see a bit of a fight here just above the 1.20 level. However, in the end of the European problems continue to be far beyond the reach of any solutions that have been suggested.
As a side note, it I am writing this just after hearing that the credit ratings agency Moody's has downgraded the Outlook for Germany, the Netherlands, Finland, and a few other higher tier European nations. What is particularly noteworthy of this is that the countries listed were considered to be "safe havens" within the European Union. If they start to lose confidence of the markets, money will flow out of Europe at a much faster rate.
Hammer
In the candlestick for the day does look rather supportive oh, and the fact that it is a hammer does give me pause for selling. It should be noted however, that these announcements came after the end of the US trading session, so the markets really haven't had much of a chance to react to them.
Personally, I hope that we do get a bounce. This will simply give me an opportunity to sell the euro from higher prices as I have done repeatedly over the last couple months. You'll notice by looking at the charts that this strategy has worked every time. I see nothing out there that even remotely suggests that it won't now as well. Because of this, I am looking at the 1.23 area as potential resistance from which to add to my already short position. However, if I don't get the opportunity I am willing to sell again on a break of the lows of this hammer from the Monday session.