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How to Trade the Greek Debt Talks

Aris Messinis | AFP | Getty Images

The Greek drama continues to roil the euro, and this strategist has a way to play investors' shifting moods.

The euro had a nice run this past week, thanks to positive news from the International Monetary Fund and investors' hopes that Greece and its bondholders would reach a deal. But whether the bullish mood will endure is another question.

"I think it's more likely than not that we get a deal," says Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional. "But the euphoria or the hope that we have right now, I don know if it lasts." And that, she says, creates a trading opportunity.

Looking past the Greek debt talks, the European Union is set to hold another summit at the end of January. And "every single time, people hope going into it and they buy European assets, they get the big bang news, it's not as good as they hoped, so then they sell and they take profits on the position," Patterson told CNBC's Melissa Lee. "That's what I want to do."

Patterson thinks that if the euro rises to 1.31 against the dollar, some of the short positions in the single currency will be washed out, so she wants to wait and sell there. She would set a stop at 1.3250 and look for a move to 1.2750.

But this strategy only applies if the Greeks and their creditors reach a deal, Patterson warns. "If the Greece deal falls apart next week, ignore everything I just said and sell wherever you're at."

Todd Gordon, co-head of research and trading at Aspen Trading Group, also likes the trade. Looking at technical patterns, he says a pair of resistance levels suggest that the euro should "roll over" at 1.31.