The EUR/USD pair tried to break out to the upside during the session on Monday, but as you can see, the 1.12 level offered far too much in the way of resistance. With that, the market looks as if it is ready to continue going lower, and with that being the case, I am a seller again and again. After all, the European Union continues to face serious issues and potential problems with deflationary headwinds, and of course the European Central bank keeping its monetary policy very loose. With that, the bond markets will still continue to favor the United States more than the European Union.
I believe that the shape of the shooting star is just about perfect, and therefore I am very bearish yet again. I think that if we can break below the bottom of the scandal, we should then head to the 1.11 level, which was the most recent low.
Are we heading to parity?
This is easily one of the most crowded trades in the Forex world right now. Because of this, I am a little bit hesitant to start too many new positions, but I recognize that if we can get below the 1.10 level, I think that at that point in time we are heading to parity. It might have several nasty surprises on the way down there, but eventually I think that the market does in fact break down. Because of this, I am very bearish and I believe that rallies will continue to offer value in the US dollar, and as a result I sell them.
The 1.15 level above is massively resistive in my opinion, and extends itself all the way to the 1.1650 level. Because of this, the market looks as if it will struggle to get above that area, and I believe that is essentially the “ceiling” in this market place right now, and about as high as the Euro can go against the US dollar currently.
