Yesterday’s move higher for the Euro bore all the hallmarks of “we have heard it all before” for me.

Sr Dragi is like the little boy who cries wolf. Everyone believes him when he says “this time, we really are going to solve the crisis”.

Everyone believes him (as he is a creditable man who I am sure believes the crisis is solvable).  The euro rises and then everyone either realizes that he doesn’t have the tools to solve the crisis or another of the “Eurozone leaders” contradicts or disagrees with what he has said and we all go back to square one.

The move higher for the Euro yesterday was held up short of 1.3000 by a number of banks trying to protect option barriers placed at that level. As I said in a previous blog, understanding the basics of option strategy and hedging will aid day traders in understanding certain price actions.

Finally 1.3000 was broken and there has been little follow through other than from stops losses and option players adjusting their hedges.

1.3020 was the target of this move but where do we go from here. It looks a lot like the Euro is overbought on short term charts and some correction is likely but the depth of that correction is dependent upon its ability to stay above support levels. The first one is at 1.2980 followed by 1.2935.

Bears who have been burned by this move will want some confirmation at least below 1.2930 and maybe even 1.2900 before re-entering.

In all probability the Euro will remain in narrow ranges today, unless there is a major surprise from the employment data the U.S.

1447^th? The only way is up!