EUR/USD gapped lower at the open for the week, but Monday saw very little in the way of movement. The candle on Friday was an engulfing bearish one, and this shows that the pair wants to fall from here. The 1.26 level seems to be a massive support level, and the closing of this pair below that area would signal another leg down. With all of the negative headlines coming out of Europe lately, a fall isn't that far out of the realm of possibility.
The breaking of 1.26 on the close has us looking to see 1.19 or so, and we think this move could be fairly quick. The headlines will continue to have a grip on this pair, and the rallies will more than likely offer selling opportunities going forward as the market is bearish for a reason. We are selling rallies on weakness, and a close below the 1.26 level.
EUR/USD Forecast January 17, 2012, Technical Analysis