The EUR/USD pair initially tried to rally during the session on Monday, but as you can see the market turned back around at the 1.3550 level, and as a result ended up forming a shooting star. The shooting star of course suggests that we are going to have quite a bit of trouble going higher, and as a result I a expect to see this market be very choppy.
The 1.35 level of course is very supportive, as it has been for some time. Ultimately, this is a very important level for this market, and as a result I will be paying a lot of attention to this general vicinity, and I believe that a supportive candle is reason enough to start going long. I also believe that a break down below the 1.35 level on a daily close would in fact be very negative, and that should send this market looking for the 1.33 level. This pair is essentially choppy at best, but it has been consolidating for some time between here and the 1.40 level, so I think that the 500 pips range is probably as good as this summer will get. In fact, I also believe that the market is one that will continue to wipeout Forex traders that have very little in the way of experience.
The two central banks that control these currencies certainly aren’t helping.
The Federal Reserve has recently stated that the economy may need continued support, which of course works against the value the US dollar and more portly works against the confidence in the US economy. With that, the market appears to be one that can continue to be very confused, and as a result the trading will be difficult. On top of that, the European Central Bank has been throwing their weight into the mix, suggesting that there could be potentially looser monetary policies ahead as well. In other words, the markets will be short-term only, and will need to be monitored day today in order to decide which direction to trade it in.
