EUR/USD fell just slightly during the Wednesday session as the market prepares for the European Union’s summit meeting over the next 48 hours. Because of this, is very possible this pair may do very little over the next two days. However, there have been times in the past that we seem little rumors move this pair very quickly as leaks come out of these meetings.
The fact that the pair did rise this time in front of the meeting suggest that perhaps the market is running out of faith in the European Union leaders. In the past, we have seen the market take on risk in anticipation of the European leaders coming together with some kind of magic solution. In reality, every time this market has rallied we have seen an opportunity to sell it. I don't think that this is going to change anytime soon and especially because of the meeting.
Over the next 48 hours, you will probably hear all kinds of rumors coming out of the meeting. Normally, it will be some low-level aide repeating something to a reporter that they heard in whispers between two senior officials. In other words, it's a lot like high school. This is why a lot of the spikes that we have seen based upon these rumors end up being faded shortly thereafter.
Broken flag 1.25
Technically speaking, this pair has broken a bearish flag and looks set to continue falling. The market is most certainly in a downtrend, but it must be said that there are certainly some people out there still hoping against hope that the Europeans will come up with some kind of solution over the next 48 hours.
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The 1.25 level of course has caused some type of support and reaction, but as it is already been violated by a couple hundred pips, I think you will be easily overcome this time. With this being said, I am either fading a rally or selling a break lower. For my trigger price, I am using a daily close under the 1.24 level.