The EUR/USD pair fell slightly during the session on Wednesday, as we look likely to roll over due to the recent selloff that we have seen due to a more dovish Mario Draghi than previously expected. Because of this, the market looks likely to reach down to the 1.16 level, and perhaps even lower. I think that the market continues to find resistance near the 1.17 level above, which was previously supportive. That is the neckline of the head and shoulders pattern on the daily charts, which signals that we could go much lower. The overall measurement of the head and shoulders should send this market down to the 1.13 level below. Ultimately, I think that rallies are to be sold, as the US dollar continues to strengthen due to Federal Reserve interest rate hikes coming down the road, and of course the dovish ECB.
If we get some type of geopolitical issue, it’s likely that the US dollar will strengthen anyway, so I think there are a lot of things coming together for this pair to drop. The 24-hour exponential moving average is starting to roll over as well, and that is one of my main signals to start selling. If we were to turn around and break above the 1.1725 handle, I could start to consider buying again, but right now it doesn’t look very likely. Longer-term, I think we will test the 1.13 level, and then find buyers to turn things around longer term again. Short-term traders continue to sell this market, and there are far too many potential pitfalls to trying to go long. Expect volatility, but beyond that expect more bearish pressure from what I see ahead of us. We have the Federal Reserve meeting coming today, so that of course will cause volatility.
Written by FX Empire