The EUR/USD pair went back and forth during the day on Friday, testing the 1.33 level for resistance, and then turned back around to fall and show the 1.33 level has been too much for the buyers. We fell down and ended up testing the 1.32 region as well. We bounce slightly towards the end of the day, but ultimately this is a negative candle that tells me this market is ready to go lower.

If we can get below the 1.32 level, we believe that this market goes down to the 1.30 handle, which is a much more significant support level. However, looking at the longer-term charts, I am convinced that the real target will be 1.28, which is much lower than I originally anticipated. Any bounce from here should be a continuation of the downtrend waiting to happen as the trend has been so strong.

No need to fight the trend.

There is no need to fight this trend, as it has been so strong. Quite frankly, I only have two ways of looking at this market: either sell it, or way to sell it at a higher level. Think of any bounce at this point in time to be considered to be "value" as far as the US dollar is concerned, but should be temporary at best. I believe that the US dollar is going to continue going much higher based upon the US Dollar Index is concerned, and you have to keep in mind that this Forex pair is 40% of that futures contract. In other words, it is essentially the "anti-US Dollar Index", and therefore the two move in exact opposite directions.

With that, I don’t see any reason to buy this market at all, and really wouldn’t be concerned about doing so until we get above the 1.34 handle at the very least. Having said that though, we did break down below the bottom of the uptrend line some time ago, so it makes sense that the downtrend does continue and that there will be a significant amount of resistance above. With that being said, I am “sell only.”

EURUSD 82514

Related Articles
  1. Mutual Funds & ETFs

    The 4 Best T. Rowe Price Funds for Growth Investors in 2016 (TROW)

    Discover the four best mutual funds administered and managed by T. Rowe Price that specialize in investing in stocks of growth companies.
  2. Mutual Funds & ETFs

    The 3 Best T. Rowe Price Funds for Value Investors in 2016

    Read analyses of the top three T. Rowe Price value funds open to new investors, and learn about their investment objectives and historical performances.
  3. Tax Strategy

    Profit from Art with a Charitable Remainder Trust

    With a CRUT, art collectors can avoid capital gains taxes on the sale of art– while also leaving their favorite charity a legacy.
  4. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  5. Economics

    How Negative Interest Rates Work

    Policymakers in Europe go for the unconventional: negative interest. What could happen?
  6. Budgeting

    The Honest Company Bundles Review: Are They Worth It?

    Learn more about The Honest Company and its bundle subscription services, which deliver discounted diapers, formula and other baby products to your doorstep.
  7. Fundamental Analysis

    Will Airlines Keep Flying High in 2016?

    Learn why the airline industry has such a unique set of variable and fixed costs that makes it very difficult to forecast its performance each year.
  8. Investing News

    These Free Super Bowl Ads Happened (BUD)

    The average 30-second Super Bowl cost marketers $5 million in 2016. But these companies benefited from free advertising during and after the game.
  9. Mutual Funds & ETFs

    Top 3 Lazard Funds for Retirement Diversification in 2016

    Learn about Lazard Asset Management, its long history of strong performance and the top three Lazard funds to consider for retirement diversification.
  10. Investing

    Harry Potter and the Unnecessary 8th Book

    A "special rehearsal edition" of the recent Harry Potter play--to be released July 31 as the eighth book in the series--will boost the franchise's fortunes, which have been sagging lately.
  1. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  2. What is arbitrage?

    Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. ... Read Full Answer >>
  3. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  4. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  5. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
  6. What items are considered liquid assets?

    A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >>
Trading Center