The EUR/USD pair fell during the session on Monday as the profit taking began. Quite frankly, the latest move has only reinforced in my mind that we will eventually break above the all-important 1.35 resistance level. This level is so important because it is exactly halfway between the 1.20 support and 1.50 resistance level on the longer-term charts. In fact, they could be said that the pair has simply been consolidating between these two levels for the last couple of years. With that being the case, we could see a run back towards the top again.
Adding to that speculation is the fact that the 1.35 level looks to be the neckline of a massive inverted head and shoulders. This head and shoulders measures 15 handles, and looks to aim for the 1.5 level as well. Because of this, it appears that the stars, the moon, and everything else in the galaxy is lining up at one point.
Daily close
I will be looking for a daily close above the 1.35 handle in order to start buying this pair. If I get that move, I am more than willing to not only buy this pair, but willing to hold onto the trade and add every time we see a pullback on the way to the top. I believe this could be a return to the old style of "buying the Euro, selling the Dollar" that Forex traders did so well and for several years.
Looking at the shape of the hammer from Monday, it looks as if the market is trying to build up enough momentum to breakout, and as such I feel it's only a matter of time. Adding to that is the fact that the European Central Bank seems to be oblivious to the fact that the rest the world is starting to enter a currency war, and as a result several the central banks around the world are currently "racing to the bottom." If that's the case, the Euro should win by default as the European simply aren't in the battle.