EUR/USD Technical Analysis October 17, 2011

The EUR/USD pair continues to run rampant and straight up during Friday’s session, proving that the market is certainly running on emotion at the moment. The hope that a solution will come out over the weekend G20 meeting seems to be part of the hope for this pair. However, this is highly unlikely and could set up the market for disappointment at this time.

The 1.40 level is above, and it should be massive resistance. The 1.3850 level was broken to the upside, and this is very important as well. The truth is that this move has been too much too quick, and it could be a short-covering rally….or at least composed of a lot of covering. The light volumes in the stock markets suggest this could be the case.

Also, we did stop at yet another massive resistance area at the close. With this in mind, it doesn’t look like it would take much over the weekend to spook the markets and get the bears back out in force. With this in mind, we are not willing to buy unless we are over the 1.40 level on a daily close. We are selling any signs of weakness at this point.