Good Afternoon, Friends, I’m on vacation, and preoccupied with getting a daughter off to college. Back in the Cretaceous Period, I made it from California to New York City with two suitcases and a trunk that arrived a week later. My young scholar has enough stuff, it seems to me, to furnish a house, never mind half of a freshman dorm room. Be that as it may, I’ve been watching the markets off and on, and have been curious to see if EUR/USD, which has been on the cusp of either a renewed push to the downside or an upside breakout, can finally make up its mind.
On the daily chart, the pair has been bumping its head on the 61.8% Fibo retracement, basically on top of the upper band of the Keltner Channels, and against the 79-period simple moving average. All of these when combined will normally constitute pretty substantial resistance, and have done so. On the back of the just-released FOMC minutes, indicating that dovish voices are prevailing (not much of a surprise), the level has broken, and a close above 1.25 would suggest that an upside reversal is in process.
I remain highly skeptical that a move higher will be sustained; the news today is mildly bearish for the Dollar, but there could be a new flood of negative news for the Euro soon as the Eurocrats begin to return from their vacations. To be fair, I suppose that it’s just possible that there could be some positive headlines, but the odds seem to me to be stacked in the opposite direction. In any case, while the level as of this morning looked like a tempting, low-risk short, it has for the moment at least been invalidated. A close back below, say, 1.2480 would get me interested in the short side again.
Best of luck!
Join Over 84,750 Traders Receiving Our FREE Daily Trading Videos