The EUR/USD pair continued its negative tone during the session on Wednesday after we had broken below the 1.35 level on Tuesday. With that being the case, the market looks like it’s ready to continue going lower, but with the tight range that we had seen during the Wednesday session, a bounce is certainly possible. With that being the case, I think that the 1.35 level will of course continue to be an area that should bring in sellers and as a result of that I would be more than willing to start selling a resistant candle in that region. Ultimately though, we could continue to go lower, which of course is an even more aggressive signal.
A break below here should send the market to the 1.33 level, which is my longer-term target at the moment. I don’t believe that we will get there in one massive move, just simply because this pair continues to be choppy as it has been for several years now, and therefore I am more than willing to start selling on signs of weakness, no matter how they appear. I also am willing to sell off of almost any timeframe going forward as I believe the downtrend should continue.
Don’t fight the trend, the breakdown certainly seems legitimate.
I believe that this market seems to be legitimately broken to the downside, which of course is a very bearish sign. I believe that this market will again go to the 1.33 level, but I also recognize that the area should be massively supportive. Ultimately, I believe that selling in the near term is probably the way to go, and the perhaps buying once we get down to that area will be a nice way to play the return bounce.
Keep in mind that we are heading into the middle of the summer, and as a result the volatility may slowdown drastically. This is a pair that features two currencies that have two central banks that are in the spotlight right now, and people wonder whether or not one of the central banks will loosen monetary policy. Because of that, the market goes back and forth in my opinion overall, but it appears that the 1.33 level is calling.
