The EUR/USD pair rose during the session on Friday, slamming into the 1.38 resistance level. This area has been the top of the consolidation recently, so of course this has caught my attention. What I find truly interesting is that we are approaching a massive downtrend line that forms the top of a downwards channel. This channel is on the monthly chart, and is a channel that has been in effect since the beginning of the financial crisis. In other words, we are at a massive inflection point in this pair.
The trend line crosses somewhere between 1.38 and 1.39, and as a result I want to see this pair break above the 1.39 level in order to start buying. At that point in time, this becomes a “buy only” type of pair, as it would certainly signal that the Euro is going to continue to strengthen over the longer term. On the other hand, we could see some type of resistant candle here in this general vicinity, and that point time I believe that we just simply slip back into consolidation. Of note though, the weekly candle is a hammer, which of course is generally is a very bullish sign.
Take your time, you should be rewarded.
This is one of those times that pops up on the chart occasionally that a lot of things line up at the same time. I am not going to rush into this trade, but I believe that longer-term setups are about to form themselves. I still can’t say that we break out to the upside, and therefore I can’t say that it should be bought. Quite frankly, we could drift lower from here. However, if you make your biggest trades at areas like this and learn to hang onto them that is how you make a lot of money in the Forex markets.
With that being the case, I doubt I’ll place a trade for the next day or two, but once we make a clear move in one direction or the other, I will not hesitate to follow.
