The EUR/USD pair did very little during the session on Monday, as we continue to hang about the 1.25 level. That being the case, the market looks as if it is trying to decide whether or not we can continue to go lower at this point in time. We think that a break below the bottom of the hammer would in fact show this market as being ready to fall significantly, and possibly as low as 1.2050 given enough time. We have no interest whatsoever in buying this market, and any bounce from here should simply offer a selling opportunity. Resistive candles will continue to be selling opportunities as far as we can see, even on short-term charts, and we believe that the significant amount of resistance above should continue to keep this market down, probably at the 1.28 level and below.
Looking at this chart, we believe that the market should continue to fall significantly, and that the European Central Bank will of course have to keep its monetary policy not only lose, but probably much looser than it is right now. With that being the case, and the fact that the Federal Reserve is exiting the quantitative easing game should continue to drive more money into the US dollar, and as a result it makes sense the market should continue to fall based upon that as well.
Even if we do go all the way to the 1.28 level, we believe that the significant pressure in that area will continue to push the market down, not to mention the fact that there is resistance all the way to the 1.30 handle. We recognize that if this market falls, there will be bounces from time to time. Look at those as selling opportunities going forward, as the market will certainly continue to trend in the direction it has based upon all of the weight that is on top of the Euro. Going forward, we are sellers overall and believe that short-term traders will continue to punish the Euro in general for the weakness in the European Union.
