Much has been made about the tight range-bound activity we have been seeing since the start of the month, but is that all about to change? Due to the Euro debt crisis and the subsequent bailout deal, there has been a lot of uncertainty surrounding the shared currency. On top of all of this, the political in-fighting in the debt-laden countries hasn’t made matters any better.
And yet, the Euro continues to trade near the high end of the range. With market activity such as this, it is usually preferable to keep trading to a shorter-term time frame and attempt to capture the range by buying ahead of support and selling ahead of resistance.
However, my feeling is that some market participants may have missed the long-entry ahead of support so they will be looking to get short ahead of the resistance we are close to at 1.385. This could be an instance where that resistance does not hold initially and a break-out forces the shorts to cover thereby driving the Euro even higher.
So watch for a breakout near that triple-top at 1.385, and take a short-term scalp on the short squeeze and then wait for a pullback to establish a better long-term entry, with the move higher projected to reach 1.396.