EUR/USD Technical Analysis October 13, 2011

EUR/USD had a very bullish day on Wednesday as traders continue to press forward with their belief that the EU has a solution coming in the near term. In the mean time, there really hasn’t been much news flow to prove or disprove this, but recent history suggests that the expected solution may or may not necessarily be impressive.

The pair rallied to the gap from a couple of weeks ago, topping out near the 1.38 level. The fact that the pair failed at that area suggests the next move could be down, and the 1.38 area also is the site of the 50% Fibonacci retracement, a common entry point. With all of this combined, we simply cannot buy the pair at this time. In fact, we are looking for weakness to get short at this point.