The EUR/USD pair went back and forth during the course of the day on Monday, essentially going nowhere. We continue to struggle at the 1.27 level, and as a result it’s very likely that the sellers are about to step back into this marketplace and make their presence be known. Even if we rally from here, it’s very likely that we will see a significant amount of selling pressure somewhere in the neighborhood of 1.28, so at that point time we have no interest whatsoever in buying, and recognize that our job is to simply sit on the sidelines and wait to see if we can get a resistive looking candle.
A shooting star formed it near the 1.28 would of course be the ideal signal to start selling, but quite frankly we would be willing to give any negative looking candle serious thought to sell, mainly because of the massive downtrend we have seen in this pair.
It’s almost impossible to imagine a scenario in which we would be buyers of the Euro, but could make an argument for it if we get above the 1.30 handle, although that of course isn’t going to happen today. In the meantime, we are simply waiting for reasons the start selling again, and signals of impending weakness. After all, we are essentially looking at what looks like a bearish flag, and a significant downtrend.
Once we broke below the 1.28 level, we got extraordinarily bearish of this market because breaking below the 61.8% Fibonacci retracement level on the longer-term uptrend of course was very significant. With that, we feel that this market could go down to the 1.2050 level, given enough time. The 1.25 level below of course is rather supportive based upon the “big figure” aspect of that level, but at the end of the day we feel that’s exactly what the market is trying to do, build up enough momentum to smash through a significant barrier. We continue to look for resistive candles, and continue to sell every time we feel that there is value in the US dollar.
