EUR/USD initially rose during the session on Wednesday on the perceived good news that the Chinese could step into the debt markets in Europe and help the markets with their massive cash reserves. However, this has been suggested before only to produce very little action. Because of this, the knee-jerk reaction was sold off as the pair continued the down move from the shooting star printed in the middle of last week.

The 38.2% Fibonacci level looks like it has held the market back at the 1.3250 area, and the 1.30 level below looks like it could be supportive. The fundamentals in Europe do not look good, and the Portuguese have even printed negative growth this week. The other periphery countries aren't expected to fare much better, and the concerns in places like The Hague, Berlin, and Helsinki will continue as their cousins simply aren't keeping up with the European dream.

The future of Europe is at stake it seems, and the politicians are willing to drag their heels. It is odd that the markets have given them such a wide birth, but it is starting to feel like the traders out there are getting close to losing their patience finally.

The 1.30 level will actually extend down to the 1.29 level, and the support should be significant. However, if the level does give way, the pair could suddenly find itself without a lot of buyers, and the move down could be fairly sharp. As a result, we are currently looking at the level with great interest.

The upside is protected by the 1.3250 level and the 1.35 level as well. The 1.35 level is the 50% Fibonacci retracement and should bring out a lot of sellers as well. (The area actually starts at 1.34, but e3xtends a bit above 1.35) With this in mind, we aren't looking to buy the Euro at all currently, and as long as the headline risks remain - we probably won't be quick to at all. The rallies going forward are to be sold, and any signs of weakness after a sharp move up we expect a lot of others will do the same. The daily close below 1.29 gets us aggressively short.

EUR/USD

EUR/USD Forecast February 16, 2012, Technical Analysis

EUR/USD Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
1.2753
1.2874
1.2943
1.3064
1.3133
1.3254
1.3323

 Fibonacci
1.2874
1.2946
1.2991
1.3064
1.3136
1.3181
1.3254

 Camarilla
1.2961
1.2978
1.2996
1.3064
1.3030
1.3048
1.3065

 Woodie's
-
1.2861
1.2918
1.3051
1.3108
1.3241
-

 DeMark's
-
-
1.3098
1.3046
1.2909
-
-