The EUR/USD pair tried to rally during the course of the day on Thursday, but found far too much in the way of bearish pressure above the 1.10 level yet again. The resulting candle is very negative, and although it’s not a shooting star, in my estimation it’s actually even more bearish. Because of this, I am more than willing to sell this market on a break down below the bottom of the range for the session on Thursday, as I believe that the 1.10 level has shown itself to be far too resistive for the market to get above.
On that break down, I would fully anticipate this market heading back to the 1.05 level, and quite frankly that makes a lot of sense. When you think about it, the European Union continues to have a lot of issues, and with the Gross Domestic Product numbers coming out of the United States today, that could in fact be the catalyst for the US dollar to continue to gain strength. If the numbers are good, I don’t see any reason why this pair does and continue much lower.
Selling rallies
Simply put, the easiest way to trade this pair is to sell rallies as they appear. Short-term charts offer selling opportunities, and as a result I continue to look at this market as one that simply is sold over and over, and every time that we rally it offers value in the US dollar. I believe that the 1.05 level will be supportive, but ultimately that area will get broken down below binds will probably take a significant amount of momentum.
That might just be what this rally was: a momentum building exercise. We need the momentum to break down, and we just don’t have it at the moment. However, it does look like that momentum is starting to reenter the market, so at this point time I fully anticipate that the Euro is going to have a soft session. Even if we did rally, I don’t see any opportunities to buy this pair until we are well above the 1.15 handle.
