During the session on Thursday, the EUR/USD pair went back and forth in a sign of support as the market could not continue to sell off. However, I think that this is simply going to be a bit of a “dead cat bounce” of sorts as the markets have fallen so significantly lately. I believe that the breakdown below the uptrend line was of course significant as well, so as long as we are below there, I don’t have any interest whatsoever in buying. Don’t get me wrong, I recognize that this bounce coming could be one of those situations for short-term traders to take advantage of scalping opportunities, but I typically don’t trade that way. I recognize that the overall weight upon the market is going to be difficult to deal with, so having said that I would rather just go with the overall momentum.
Selling Rallies
Essentially what this means is that I will be selling rallies going forward. This short-term rally could be an opportunity to pick up value in the US dollar. I believe that we are heading down to the 1.05 level given enough time, and I recognize that it is not until we break above the aforementioned uptrend line that I can consider a trade to the upside with any sense of ease.
In fact, I would even venture to say that we have to wait until we get above the 1.10 level in order to start buying. That of course would be a significant move, and show real strength. At this point in time though, the situation in the European Union does not warrant buying the currency, especially considering that the US dollar is considered to be the “safer” of the currencies in this market.
Ultimately, every time this market rallies I think that there will be selling opportunities on short-term charts. I don’t expect the move to the 1.05 level to be easy, because quite frankly it is very noisy below here.
