The EUR/USD pair initially fell during the session on Tuesday, but found support at the 1.3400 level in order to bounce back and attempt to breakout and above the 1.3500 handle. A break of this area would indeed be very significant, and have me buying this market hand over fist.
Main reason is that the longer-term charts show a massive inverted head and shoulders that is about to be broken out of. The neckline is of the 1.35 level, and it is also the midway point between the 1.20 and 1.50 levels. This area is a massive consolidation area for the last couple of years, and as a result a breakout above the 1.35 level and heading towards 1.50 could be thought of as nothing more than a return to the top of this rectangle.
Looking at this candle, I believe that the Tuesday session is a signal that we are about to breakout. Simply put, every time this pair falls people start buying again. It's only a matter time in my opinion, and as a result I'm okay with buying here, but I'm also willing to watch this pair drop and hold onto the trade as I believe that the long-term opportunity. Going forward, I would be buying on the dips and adding to this position as we go higher. I'm perfectly comfortable and capable of holding onto this trade for what could be months, if not years.
ECB on its own
The European Central Bank is on its own at the moment as the rest of the large central banks seem to be prepared to devalue their own currencies. The Bank of Japan is by far the biggest culprit at the moment, at least in terms of being up front about it. The Federal Reserve of course has a very easy monetary policy, and as a result the Euro continues to gain against the Dollar as the ECB is recently stated it felt no need to enact new monetary policy. In other words, they aren't planning on easing anytime soon. This was a bit of surprise in the marketplace, and we have seen an explosion higher since then. I believe that a daily close above 1.35 signals the next massive leg higher.
