The EUR/USD pair tried to rally during the Friday session, but as you can see it pulled bank and formed a shooting star that sits just on top of the 1.32 level, an area that had been significant resistance that we broke out of on Thursday. That being the case, I feel that this market could be setting up for a return to the previous consolidation area, and on a move below the lows for the session on Friday, I am willing to start selling if we can close below that 1.32 level. I think at that point time, we would more than likely see a return 1.31, and then possibly 1.30 before it's all said and done.
A return to that consolidation area wouldn’t exactly be a shocker. This isn't to say that I fully expect it to happen, just that it appears that with the charts are trying to tell me. On the other hand, we could breakout to the upside, and any move above the Thursday highs is enough to get me to start buying as well. At that point time, I would be aiming for the 1.35 resistance level.
Whatever happened to European issues?
One thing that kind of stumps me is the fact that we have totally ignored the situation in Europe. It seems like the markets are basically focusing on one side of the Atlantic or the other, but never both at the same time. We spent a few months worried about America, and then spend the next few months worried about Europe area and my question of course is when we start worrying about Europe again?
A couple of the indices in Europe right now look very suspicious, and like they are ready to break down. These are the usual suspects, the MIB in Italy, the IBEX in Spain, and the FTSE doesn't look exactly healthy either. Because of this I think that we are going to start focusing on Europe fairly soon, and when we do this should of course punish the Euro. However, the trade now is described above, and that is my plan of action.
