The EUR/USD pair tried to rally during the course of the day on Wednesday, even as it touched the 1.3150 level. A lesser executive in the European Central Bank suggested during the day that further quantitative easing was very unlikely out of the ECB next week, and the Euro of course did get a little bit of a boost because of that. However, you can see that the gap from the open this week is still in effect, and as a result the 1.32 level is the beginning of relatively strong resistance. I see that resistance going up to the 1.3250 level, and as a result I am looking for resistive candles above in order to start selling. I’m willing to look at short-term charts to get those signals, and as a result I am essentially “sell only” at the moment.
In fact, it’s not until the market gets above the 1.33 handle that I would even consider looking for buying opportunities. I think that the 1.30 level below is in fact the next target for the Euro, and it’s only a matter of time before we get down there.
Strong downtrend, nothing’s changed.
The downtrend is most certainly still in effect, so as far as I can see nothing has changed. This is a market that should continue to offer selling opportunities every time it rallies, and therefore short-term traders will continue to pound the Euro over the next several sessions in my estimation. On top of that, the markets could very easily break down below the 1.30 handle, and head to the 1.28 level which is my longer-term target. This market looks horrible, and nothing has really suggested that anything should be different. Even if the ECB doesn’t add quantitative easing next week, it’s only a matter of time.
There is no inflation whatsoever in Europe at the moment, and that makes central bankers nervous. They will trying to stoke inflation through quantitative easing one way or the other, and as a result I believe that the market continues to sell.