The Euro opened with a substantial gap up versus most of the majors this week, EURUSD opened with a 100 pip gap give or take depending on your broker and the time they open for business. While that led to a bullish rally, the daily EURUSD candle, though not officially closed at time of writing, is a doji. This indicates some indecision in direction. A look at the weekly chart, shows an interesting scenario that we were monitoring last week.
What we’re seeing on the weekly chart is some support at a lower weekly trend line, although fundamentally, we don’t see much of a change in the Euro or the Eurozone. There are still major problems and serious rumors coming from the Euro-zone that are continuing to resonate through the markets like a slowly creeping black plague of the middle ages (did I over dramatize that too much?). We weren’t surprised to see some buying in the Euro or a short lived correction.
To get an idea of what to look for for the next few days and to get an idea of what direction we’re looking to trade the Euro, look at the 4 hour chart. The down trend is clearly still intact with the most recent swing high still printing as a lower high. So until the charts tell us otherwise, our bias is to the short side and if we can find a correction to a resistance level we like we’ll look for shorting opportunities.
What do you think? Leave a comment below.