EUR/USD Technical Analysis October 14, 2011

The EUR/USD pair fell fairly hard during the Thursday session as traders continue to react to news in a skittish way. The market rebounded in the US session though, and saw the pair for a hammer at the top of the recent run up. This candle could either signal that we are about to run much higher, or that it is a “hanging man”, which is a very bearish signal indeed.

A breaking of the bottom of this candle gets us aggressively short of this pair, and a breaking of the top has us buying, but only until we get closer to the 1.40 level, which we see as massive resistance. We would also be quick to move stop losses to break even, as the pair has run up so fast, and there is always going to be danger of bad news hitting the wires that could send this pair straight back down.