By: DailyForex.com
The EUR/USD pair broke down during this last month, slicing through the uptrend line that had previously made the bottom of an ascending triangle. The fact that we broke down below the bottom of the hammer to do so from several weeks back also shows quite a bit of softness. Quite frankly, one of the things that you cannot overlook at this point in time is that the European Central Bank is suggesting that further stimulus is possible. Because of this, the Euro should continue to show quite a bit of softness going forward, in most currency pairs not just this one.
However, this currency pair is a bit different as the Federal Reserve looks likely to have to raise rates fairly soon. The fact that the last candle during the month ended up forming a shooting star the weekly chart suggests that we are going to continue to see sellers every time this market rallies, and that’s exactly how going to trade this pair between now and the end of the year.
Selling Short-Term Rallies
I believe that you can make money selling the Euro over and over, as long as you are patient and wait for some type of setup. On a resistant candle after short-term rallies, it should be a nice selling opportunity as we will reach towards the 1.05 level given enough time. It’s a large, round, psychologically significant number, so it makes sense that the market would aim for that area.
I even think that we will eventually break down below there, and then we should reach towards the parity level. I don’t know that we can do that during the month of December though, because we will have to see some type of bounce in order to build up momentum going forward. Nonetheless, the one thing that I know that I’m not going to be doing during the month of December is buying the Euro against the US dollar.
