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The EUR/USD pair tried to rally during the session on Monday, and while he did hold some of the gains, it should be noted that the 1.30 level has yet again offered resistance. The trend line that has been pushing this market higher still holds true, but we are now starting to see a lot of pressure to the downside as well. This suggests to us that we are going to see some type of explosive move in the relatively near term.
Unfortunately, this could come in the form of headlines and we never know what that means. Looking at the technical analysis, we see quite a bit of noise between 1.30 and 1.35 as resistance just waiting to happen. The Euro is certainly overvalued at this point in time as not much has changed, and looking at this we think that we could possibly be one enough for a break down, not a melt up.
We believe that the 1.28 level will be crucial, as it would be massive support been broken. The recent area looks quite a bit like a descending triangle, and this has is concerned about the uptrend as well. Any daily close below the 1.28 handle would have a shorting the Euro at this point time because it will have broken both the horizontal support as well as the trend line support.
As for buying this market, it is very difficult to do as we have been seeing the 1.30 level offer so much resistance. The path of least resistance seems to be down at this point, even though we have been in an uptrend for so long. Looking forward, we are more than willing to skip any positive action unless we see some type of solution in Europe. Until that happens, it's going to be very difficult to be bullish of the euro in general, and as such we will more than likely avoid this pair, unless of course it gives us a nice sell signal as it makes more sense. The rally that we've seen since the summer has been built upon hopes, and we all have seen how that generally works out.