The EUR/USD pair broke higher during the session on Monday after initially dipping slightly. That being said, I see a significant amount of resistance near the 1.10 level, and as a result I am not necessarily willing to start buying the Euro yet. After all, the market should continue to find sellers sooner or later, and with that I feel that the most comfortable position will be shorting this market as the downtrend is without a doubt still in effect. Besides, as you can see on this market I have a nice yellow box representing the general vicinity where sellers could come back into play.
I believe that the European Central Bank will continue to keep the markets very liquid, and as a result we should send this pair back down. The US dollar of course will be buoyed by the Federal Reserve and its leaving of the quantitative easing game over the longer term, and I look at this as a pullback in an otherwise very bearish market.
Selling rallies
My strategy all along has been selling rallies in the EUR/USD pair, and I believe that will continue to be the way going forward. Ultimately, I think that this market breaks down given enough time, so I believe that it’s simply easier to sell rather than buy and try to deal with the volatility that we will undoubtedly see. There are far too many possible issues in the European Union, and as a result I believe that it’s only a matter of time before something happens that gets the market concerned about the Euro again.
Even if we broke out to the upside, I think that it is not until we get above the 1.15 level that I can feel comfortable buying the Euro again. I don’t find that likely to happen, and truthfully I believe that we are simply rallying so that we can build up enough momentum to break down significantly. Once we get below the 1.05 level, I feel that it’s only a matter of time before we hit parity level.
