The EUR/USD pair fell hard during the session on Friday, but remains above the 1.28 level. That area has been supportive in the past, especially on the longer-term charts. I still expect to see this area hold up for the most part, so a slight bounce from here wouldn’t be overly surprising. I look at this market has been consolidating at the moment, and being stuck between the 1.28 level on the bottom, and the 1.30 level on the top. Short-term traders continue to flock towards his marketplace, but the fact that the 1.28 level is so supportive on longer-term charts has me thinking that perhaps a bounce is overdue.
On the other hand, if we break down below the 1.28 level on a daily close, I would become very bearish and start selling the Euro in general. It would not only break down in this marketplace, but it would more than likely selloff against the Canadian dollar, British pound, and many other major currencies around the world. The one outlier is probably the Japanese yen, as the JPY is moving in its own ways against most currencies.
Selling rallies will be the best way to trade this pair as far as I can see.
I think that selling rallies will be the best way to trade this pair going forward, and I will not hesitate whatsoever to sell resistive candles at places like 1.30, and 1.32 or so as there is a gap up there that should continue to offer plenty of resistance. In fact, it’s not until we get above that gap that I consider buying this market for any real length of time.
It is obvious to me that the trend is to the downside, and with the fact that we close the very lows of the range on Friday, I believe that it’s pretty obvious that buying this market is going to be almost impossible. If we get a longer-term buy signal, perhaps a hammer on the weekly chart, I would consider buying at that point, but until that happens, I can only sell.
