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FXEmpire | February 22 2012 2:05 EST
EUR/USD rose initially on Tuesday after the news came out that the EU Finance Ministers voted to bail out the Greeks for the second time in three years. The markets expressed relief in the form of Euro purchasing, and as a result we saw this market rise above the 1.3250 level as the celebrations began. However, at the end of the day we see something quite different.
The market participants certainly have to have fatigue when it comes to all things Greece, and as sure as the sun rises tomorrow, the Greeks will find a way to be in the headlines. The fact is that the bailout still left the possibility of a default out there, and with this in mind, the markets now have to be able to trust the Greeks going forward. One question that hasnt been asked is this: Who exactly is willing to lend to the Greeks going forward after taking a 53% haircut on these bonds? Hard to imagine quite frankly, and this will continue to be a problem.
The daily candle turned out to be a shooting star at the 1.3250 area, and this proves yet again that the Euro may be running into significant resistance at this point. The 38.2% retracement is right here, and as a result many technical traders will have stepped into the markets to sell. The trend is still down over the last year, and this shouldnt be forgotten.
The shooting star doesnt necessarily suggest a meltdown, rather a return to the consolidation area just below. The 1.30 level should still offer support as those that still believe in the European experiment will buy there, but the fact is that we may be seeing a market that is gradually understanding just how long-term this problem in Europe really is.
The Greeks will have trouble finding anyone beyond the European Central Bank to buy their bonds, and there are other countries that have issues. With all of this in mind, plus a recession on the way who will want to invest in Europe? It is this undeniable fact that has us bearish overall, and we are willing to sell a break of the Tuesday lows.
EUR/USD Forecast February 22, 2012, Technical Analysis
Originally posted here
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