The EUR/USD pair fell during the course of the session on Wednesday, but remains above the 1.35 level, an area I see as vital. With that, I’m not ready to start selling yet, although the candle for the day looks rather weak. The biggest problem I see with this shooting star shaped candle is the fact that it’s right above the 1.35 handle, an area that cause such a massive reaction to the upside last time we touched it. With that being the case, I think that the market could be getting to the point where buyers may step in again, thereby making it almost impossible to sell.
A supportive candle at the 1.35 handle would be reason enough for me to start buying again, as I think we could find ourselves stuck in a range bound market between the 1.35 level on the bottom, and the 1.37 level on the top. Ultimately, is going to be choppy regardless, that’s just the nature of this market these days.
Federal Reserve and the European Central Bank.
Unfortunately, the way to trade this market is to figure out who the market believes more, the Federal Reserve or the ECB when it comes to trying to destroy their own currencies. That is and quite how they put it obviously, but both are entertaining very loose monetary policies. That does nothing to help the value of the currency, and of course that’s what the central banks one at the moment.
With that being the case, I feel that this market will continue to be a short-term traders market, and quite frankly I hope we get stuck between these 2 levels for the rest of the summer. Position the easiest market moves to trade, as you simply buy at the bottom and sell at the top. At this point in time, I believe that is what is going to happen. That’s how I’m playing this market, but if we break down below the 1.35 level on a daily close, I would have to admit that the sellers are taken control and we should go down to the 1.33 handle.