The Euro rallied quite nicely during the trading session on Monday as the United States was closed for Martin Luther King Jr Day. The real momentum could be seen on Tuesday.
- It was Martin Luther King Jr. Day in the United States, so one of the biggest players in the market was nowhere to be found.
- When I see this type of behavior, it does suggest that perhaps we are trying to turn things around, but the reality here is that we won't really know anything until New York gets involved.
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The 50-day EMA sits above, and I think the narration of the day is probably going to be that the United States is falling apart and is going to lose its world reserve currency status or some other hyperbolic nonsense, but the reality is that the Euro has been falling for weeks for a reason, and this should continue to be the case.
We just needed a reason to bounce, and we found it. European traders look at this as a problem for the United States, which is interesting because if you understand how the global financial system works, you'll understand that eventually you have to come back to the dollar. So I look at this as an opportunity to short the Euro on signs of exhaustion, which, of course, we don't have yet.
Looking for a Long Wick
It might be a scenario where we do it on Tuesday or Wednesday. I'm looking for a long wick to the upside on the daily chart to start shorting again. It's not until we break above the 1.1850 level that I would anticipate that the Euro truly takes off. All things being equal, we are still very range-bound, and we just happen to be basically in the middle of the range.
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