The EUR/USD pair shot straight through the 1.38 level during the session on Thursday, as the European Central Bank suggested that it wasn’t going to do anything to loosen monetary policy anytime soon. Because of this, I feel that the Euro is going to continue to strengthen, but there is one massive bit of resistance to get over first.
On this chart, poorly drawn of course due to the constraints of the MT4 platform, is a downtrend line from a monthly bearish channel. This actually started back during the height of the financial crisis, so break out above this trend line would indeed be massive in its implications. Considering that the area is so important, I am going to wait until we get a daily close above the 1.39 handle. If we get that, I believe that the Euro will in fact enter a new bullish phase that could send this pair much, much higher.
Nonfarm payroll of course will have massive implications.
With the nonfarm payroll number coming out later today, we will of course have massive implications in this marketplace. After all, if the jobs number out of the United States suddenly looks a lot stronger that just strengthens the argument for tighter monetary policy out of the Federal Reserve. With that, that could send this pair back down in favor of the US dollar. So having said that, I am quite content to sit on the sidelines until the end of the day, and place my trade then. If we are above the 1.39 level, I quite frankly plan on hanging onto the trade for quite some time.
As this is the beginning of a longer-term signal as far as I can tell, I am perfectly content to miss out on the first 50 pips or so of the move if I have to. Quite frankly, this is the type of move if we break out we could be looking at 1.50 quite easily, although it will of course take a serious amount of time. Nonetheless, there is the possibility that we pullback, so I will be studying this chart tonight.
