During the session on Wednesday, the Euro continued to rise against the US dollar. In fact, we broke well above the uptrend line that had previously been the bottom of a significant ascending triangle, so now that it has happened, I believe that it is only a matter time before we continue to go much higher. However, you can see that on the chart I have circled a cluster of noise just above. I think this cluster of noise could be a bit resistive, so it’s not really until we get above there that I am more comfortable buying. The 1.11 level being cleared would be that signal as far as I can tell.
On the other hand, we could get some type of selling pressure in this area, and a resistive candle would of course be a potential selling opportunity. At this point, I believe that perhaps the market is starting to get over the idea of the Federal Reserve raising interest rates, as most participants believe that it will only happen once.
European Central Bank
The European Central Bank shocked the world when it refused to do aggressive stimulus at the last meeting, as people had fully anticipated it. Because of this, the Euro was suddenly oversold, and as a result the market had to bounce. Quite frankly, I think it is difficult for this market to continue going higher without significant volatility, so any move above the 1.11 level would have to be looked at as a potential long-term trade, and unless you can deal with this type of back and forth type of action, it’s almost impossible to imagine being comfortable with a long position. However, when you change trends, it’s very unlikely that it’s going to be an easy trade, and it’s at times like this where it is most profitable to swim against the tide. Nonetheless, you have to be able to hang onto the longer-term move in order to make any significant profits.
