Fundamentals aside, selling the EURUSD at current levels may not pan out the way you expect.
The pair has suffered huge losses over the past 12 months, erasing more than 3,000 pips since that time. While this means little in terms of future direction, the overextended nature of the pair combined with current price structure does suggest sideways movement, at minimum.
The fact that the pair was able to break from channel resistance and subsequently rally 140 pips during Friday’s session suggests a slightly bullish bias, at least for now. The pair is also moving to put pressure on the 1.0904 resistance level for the second time in two days.
Some may argue that a key resistance level such as this could present a favorable selling opportunity. But my question to that sentiment would be – to what end?
Those selling at 1.0904 have to contend with the 1.0820 area just below. And that assumes that we see a substantial rejection from the upcoming resistance level.
I am by no means bullish on the Euro. In fact I remain bearish over the medium to long-term. But as traders it’s important for us to be aware of what’s happening in the short-term if we hope to capitalize on the broader shifts in sentiment.
For my part, the current situation does not warrant selling nor does it justify buying the pair given the narrow trading range and the potential for increased volatility over the situation in Greece.