Friday, June 28, 2013

Euro approaches the zone of rejection

Ever since early September of last year the EURUSD pair has been resolutely prevented from getting below a zone that approximates the price line between 1.28 and 1.30. No matter how bad the news for the Single Currency and no matter how good that for the Greenback, this has been the case. The European Central Bank (ECB) is on an easing policy while the noises out of the Federal Reserve have been towards the so-called tapering of Quantitative Easing. All of this should have, by traditional Fundamental Analysis standards, resulted in a sustained downward trend in the pair.

Just like we have seen, for example, in AUDUSD and, of course, in the US dollar price of Gold.

Price action on the EURUSD hourly chart in recent times has been mechanical (or should we say electronic) in its depiction of the difficulty the pair has even getting below 1.30, which seems to be the first line of defense for whatever agency is responsible for this state of affairs:

So what is going on here?

Well, nobody knows for sure. We could speculate, but by far the most important thing is to be aware of the tendency and take it very much into account when formulating your trading plans.

1 comment:

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