The EUR/USD pair initially rallied at the open on Monday as it was announced that a deal was reached in the Greek debt crisis. However, the Greek still have to vote in Parliament, and on top of that there seems to be a lot of mistrust of the situation. Besides, by the time it’s all said and done there is no real sign of growth coming out of Greece, which means we will probably be dealing with this situation again.
Having said that, the market did initially tried to rally but the 1.12 level offered far too much in the way of resistance as the market pulled back. By doing so, we tested the 1.10 level, which has been very supportive. In fact, we believe that the support extends all the way down to the 1.0 90 handle, so we are not willing to sell this market quite yet. We believe that there is quite a bit of support so we are simply waiting to see if we get a supportive candle in this region. If we do not, and the market breaks down below the 1.09 level, at that point in time we would become massively short of this market as it would signal a potential break down. It does have to be said that at the end of the day, we are closing towards the very lows of the candle, which of course is not a good sign.
With this, we believe that today’s candle will be very important and therefore we will more than likely wait until we see what the close of the business day is like. Simply put, if we get below the 1.09 level on the close, we are sellers. On the other hand, if we get some type of supportive candle or just simply a green one, we would be buyers as the market should continue to find support. At this point in time though, we have to admit that the reaction to the Greek deal hasn’t exactly been stellar. That of course has us a bit cautious.