The EUR/USD pair rallied during most of the session on Friday, but gave back quite a bit of the gains once we got above the 1.30 level. The thing that I found most interesting about this candle is that it is the second shooting star a row, which normally means bad things. However, we did have the Wednesday hammer that showed support as well. This pair looks very tight at the moment, and there will more than likely be some type of breakout and significant move coming in the relative near future.
It makes sense that we are having trouble gaining or falling quickly, simply because there are so many concerns out there right now. You have the US fiscal cliff on one side of the Atlantic, and you have the European debt crisis on the other. This pair has been a headline driven pair recently, and it only has exacerbated by the fact that Europe hasn't really figured anything out yet, and the Americans look like they are nowhere near coming together on some type of solution.
1.30 will continue to be the epicenter
It is my opinion that 1.30 will continue to be the epicenter until we get some type of decisive move out of United States Congress. Europe is very unlikely to come to some type of permanent solution to its debt crisis anytime soon, and the markets obviously know this. In fact, in a roundabout way the market is simply given up - after all Spanish, Greek, and Italian yields in the bond markets are all falling. I believe that this is because the ECB is willing to step behind these countries and prompt them out financially if they need it.
Looking this chart, I expected be a short-term trader’s chart, and we will more than likely continue to bounce around between the 1.3050 level, and the 1.29 handle. With this in mind, I am looking to trade off the short-term charts such as the one hour time frame, and will sell once we get to the high of the range, and buying at the low.
