The EUR/USD pair tried to rally on Friday, but failed to land any impressive gains as you can see. The resulting candle is a shooting star, which of course is a bearish sign. The failure to hang onto gains isn’t that big of a surprise though, as the market went so hard to the upside on Thursday. However, be careful thinking about shorting this pair, the Euro is certainly in control at this point in time.
The EUR/USD pair should go to the 1.40 level before it’s all said and done in my opinion. Because of this, I am going to look at this shooting star as a signal that we may get a little bit of pullback in order to get involved at a lower price. Remember, sometimes financial assets like the Euro “go on sale”, and this is when we should be buying – when things are cheap.
The Federal Reserve will practically push for 1.40
The Federal Reserve isn’t going to taper off of quantitative easing anytime soon, and as a result the Fed is practically going long of this pair. The markets will not hesitate to push this pair higher, and because of this I am already long. Nonetheless, the pullback will be met by me with more buying. The 1.40 level will be resistive as it is a large round number, and it is up there that I will more than likely exit the position.
The 1.35 level should be supportive, as it has been over the last few weeks. In fact, I consider it the “floor” in this market at this point in time. The level should be able to take just about anything at this point, judging by the way it has held up over time.
The large candle from Thursday shouldn’t be forgotten either, as it should show significant strength under this market. The candle only solidifies my opinion on the Euro, at least as it goes against the Dollar. The markets look primed to go much higher – so I will simply wait for a supportive candle. However, if we break above the top of the shooting star – I am buying right away.