The EUR/USD pair fell during most of the session on Tuesday, as the 1.12 level continues to be resistance. Ultimately, I believe that this market should continue to go lower but the fact that we bounced enough to form a bit of a hammer suggests that we may get a little bit of a bounce as follow through. Ultimately though, I believe that any resistive candle above should be a nice selling opportunity.
Looking at this chart, I recognize that there is a lot of resistance all the way to the 1.15 level, so therefore any resistive candle above is reason enough for were me to start selling the Euro yet again. With that, I have no scenario in which a willing to buy this pair as the European Union continues to struggle with deflation, and several other economic concerns.
Sell and sell again
I believe that this is a market that you can sell and sell again, and that there’s no way to buy because even at the 1.15 level, it’s simply an area that is far too resistive. I think that the resistance runs all the way to the 1.1650 level, and with that it will be almost impossible to break out. I believe that a break down below the 1.11 level sends this market to the 1.10 level.
If we managed to break down below the 1.10 level, I feel that the market would then head to the parity level over the long-term. Ultimately, that is something that I never thought I would say, but the fact is that there isn’t much in the way of resistance between here and there below the 1.10 handle. With that, it would be very negative and therefore force me to start shorting the Euro again.
I believe that the European Central Bank will continue to struggle to stay in front of the economic problems that the European Union has. Expect loose monetary policy to continue to bring down the value of the currency, while the US dollar continues to be favored.