Monday, June 29, 2009

EUR/USD strong buy signal? I don't think so...

Almost everyone is long the EUR/USD pair, and most indicators signal a 'buy'. Even FXStreet's ASI (Analyst Sentiment Index) is 100% buy. Anyone that has followed this pair closely lately knows kind of what is about to happen. After making higher highs every time when major news is around the corner, seller are standing buy to short this pair at its peak.
Looking at the chart above you would say indeed the EUR is about to skyrocket. But let's take a broader look below.
This is a weekly chart (click on it for a bigger image). In the beginning of the week the same instance occurred. It was making higher highs before the interest rate decision, and after it was announced it plummeted, crawling back up during the rest of the week. It's almost like this is about to happen again. I'm not currently in this trade but I'll wait until Thursday to see what's going to happen. A few of the major happenings are the ECB press conference and the US unemployment rate. This week overall is an important week for the pair because whatever happens it's most likely to trade in that direction in the long run. Keep a close watch on it if you're thinking about jumping in this trade. Depending what happens I think Wednesday/Thursday (1.43 perhaps?) it will reach its peak and then slowly trend downwards. A good short from that point and a good opportunity to harvest a lot of pips.

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