The EUR/USD pair initially fell during the course of the day on Wednesday, but as you can see found the 1.29 level supportive yet again. Because of this, we did in fact form a hammer but we have a shooting star from the few sessions before to worry about if we decided to go long. Besides, without a doubt this is a very negative market, so anybody buying down here is looking for serious trouble in my opinion.
On the chart, you can see that I have the 1.30 level marked as resistance, and I believe that short-term selling opportunities will abound near that level. Even if we don’t get it there, the gap at the 1.3250 should offer quite a bit of resistance as well. In fact, it’s not until we get above there that I would even consider buying this pair.
Technical bounce
I think that we are just in an oversold condition, and as a result we might get a little bit of a bounce, but after the impulsive candle from last week, there’s no reason whatsoever to think that the buyers are going to suddenly take control of this market. Was be honest here: the European Union is in a lot of trouble when it comes to economic growth. That being said, there is serious concerns about deflation, which of course is the worst thing a central banker can here. Because of this, I believe that the European Central Bank will loosen its monetary policy further, and therefore dry the value the Euro down.
I see the real support at the 1.28 handle, and therefore look for the market to continue driving towards that area before we see any believable support. Between now and then, I’m going to continue to sell rallies on short-term charts, and have absolutely no interest in buying the Euro, and was of course we get above the aforementioned 1.3250 handle. With that being said, I am very bearish, and am not only selling the Euro against the Dollar, but against several other currencies as well.
