EUR/USD: Passed Above Trigger Point

In my weekend newsletter I laid out some reasons why I am not really on the bear train for the EUR anymore.  Make  no mistake I am with the trend as long as it is there, but I am more so watching for a reversal at this point.

The drop below 1.2330 is a “pivot point” which I am watching.  The drop below provided a quick trade to the downside, but the rise back above it has placed a bullish sign.  This was a significant level back from 2008, and since the forex market likes to overshoot major levels this was what I was watching for to start looking at some upside –  drop below and a rally back above – a bear trap.  It may not be the bottom yet, we shall see, but right now the pair continues to trade above this pivot point.

A fall back below this level once again puts a negative bias back on the Euro, but lows still need to be taken out at 1.2234 before further downside can be seen.

I am not advocating catching a falling knife.  The trade is based on the pairs tendencies and we are basically looking at a break even trade now if the pair pulls back to the pivot point.  Since this level has been moved through a couple times, actual support comes in from 1.2280-1.2250 and then at the lows 1.2234.  A fall below this indicates further downside, yet I will also be looking for quick bear trap trades which may turn into full reversal trades if the pair does in fact reverse after putting in a bottom.

The pair seems a little stalled at 1.2400, with resistance beyond between 1.2415-1.2430 and then 1.2500 – 1.2520, 1.2540 and 1.2575

Cheers,

Cory Mitchell, CMT

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