The EUR/USD pair fell hard during the course of the session on Wednesday, as we finally broke down below the 1.2350 level, an area that has been massively supportive recently. That being the case, the market also looks as if it’s ready to go lower based upon the fact that the candle closed at the very lows of the range for the session on Wednesday, which is almost always a sign that we are about to see continued selling.
The Europeans have an interest rate decision today, and if it appears that the market is going to continue seen more quantitative easing out of Brussels, it makes perfect sense of this pair would continue to go much lower given that the interest-rate differential should start to shrink between these two currencies yet again. On top of that, we have broken down through some significant support barriers recently anyway, so there’s no way to buy the Euro regardless. It looks weak against almost every other currency in the world, so it makes sense that it will of course struggle hard against the US dollar overall.
Ultimately, we think that rallies will continue to offer selling opportunities in a marketplace that is certainly a one-way bet at this point. We believe that it’s only a matter of time before we head to the 1.2050 level, an area that began the massive uptrend that we are now breaking back down below. The return trip looks set to happen, so therefore we have no interest in buying this market at the moment, and it’s not until we get above the yellow box on the chart that we would consider buying the Euro, and if we get above the 1.30 level, we feel that the market should then have changed the trend to the upside and should continue to go much higher than that. However, we believe that any resistive candle between here and there should be a nice selling opportunity given enough time. With that, we are “sell only” at this point in time as the trend is so strong.
