By: Christopher Lewis
EUR/USD had a rough end of the week on Friday. The US Non-Farm Payroll report came out at positive 115,000 jobs added in April and this pair originally rose as a result. After all, currencies are measures in a relative sense, and if the US is struggling then the market thought that the Europeans would be “not as bad”.
However, after a few moments the market turned back around. The EUR/USD pair has been a difficult and choppy pair to trade over the last several weeks, but the longer term charts look like they are finally starting to show some kind of clarity.
The risk sentiment of the markets may have taken a bit of a nose dive over the last couple of days, and this pair could be one of the more obvious places that the markets will focus. The pair has been a headache for many traders I know, and as such many have simply walked away from it.
Triangle and 1.30
I have been talking about the potential triangle in this pair for some time, and there is nothing in this chart that even remotely suggests that the triangle is nullified. The action lately has been short-term only, and while this provides all kinds of excitement, it makes for a nerve racking trading environment.
The obvious signals are the best ones. This pair has an obvious support level at the 1.30 handle that needs to give way in order for the descending triangle to be validated. The pair certainly has a bit of a dark cloud above it, and there are now eleven European nations in recession. With the elections in France, Greece, Germany, and Italy over the next couple of days we could see a catalyst for this pair finally.
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The pair has an amazing ability to float at the 1.30 level, and the support area starts all the way up to the 1.31 handle, so the next one hundred pips below is going to be a challenge. On a daily close below the 1.30 level – I am aggressively selling this pair. As for buying, I think we are a long way from being there. The break of the lows from Thursday’s hammer suggests to me that the pair is destined to fall by the time it is all over. However, this is a stubborn pair.