EUR/USD - Shorting Resistive Candles? - 29 September 2014

The EUR/USD pair fell hard during the course of the day on Friday, breaking the bottom of the hammer from the session on Thursday. Because of that, it appears the market is ready to continue going much lower, heading to the 1.25 level first in my opinion. When I look at the longer-term charts, I also suspect that we could go as low as 1.20 before the move is all said and done. After all, this was a massive support region that we have just broken below, and it also was the 61.8% Fibonacci retracement level that we broke through on Wednesday.

The marketplace certainly is one that you can only trade in one direction, down. After all, the European Central Bank is expected to loosen monetary policy going forward, and as a result it should continue to work against the value the Euro overall. That’s not to say that we won’t have bounces from time to time, and those bounces will of course offer selling opportunities.

The Federal Reserve

The Federal Reserve as you can tell by its recent announcements has decided that it is ready to get away from quantitative easing. This is of course very strong and positive for the US dollar, as it shows that the US economy seems to be getting closer to normalization, and that of course has money flowing into the United States as money goes to where it’s treated best. This is especially true when it comes to the stock market, which of course has an influence on what happens with the US dollar as well, as the S&P 500, NASDAQ, and Dow Jones Industrial Average all look very healthy overall.

As far as this pair is concerned, any bounce should offer selling opportunity and I would not hesitate to start shorting resistive candles. It is not until we get above the 1.30 level that I would even consider going long of this pair, and at this point in time I don’t think that’s going to happen anytime soon.

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.