The EUR/USD pair initially fell on Wednesday, but found support near the 1.0550 level. This is an area that caused enough support to turn things around and form a hammer, which of course is a very positive candle. However, the market is most certainly in a massive downtrend, so any bounce from this hammer is one that only invites more selling as far as I can see. I believe that the 1.05 level will be targeted, and the fact that the European Central Bank has an interest rate decision and more importantly a statement coming out today, it is possible that we will have enough volatility to finally break down. After all, the European Central Bank has suggested that perhaps they will add stimulus which of course should drive down the value of the Euro.
Selling Rallies
I believe that selling rallies will be the way going forward, as there is more than enough resistance and noise above to bring in the sellers again and again. I think that this market may need to build up momentum, at least to break down below the 1.05 level. Rallies that show signs of exhaustion will be the way to go forward in my opinion, and it’s not until we break above the top of the uptrend line that is on the chart that I would consider buying this pair at the moment. That essentially puts the market at the 1.10 level before I can start going long.
On the other hand, once we get below the 1.05 level, I think this market will target parity. We will have quite a bit of volatility today, and today could be the day that we finally break down. I have no interest in buying and think that the Euro will continue to be shunned overall while the US dollar continues to be one of the strongest currencies in the world.
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