Euro Pulls Back From Previous Trendline
I do not have any interest in trying to get too cute with this pair, am simply looking for opportunities to start shorting on signs of exhaustion.
The Euro has fallen rather hard during the trading session on Thursday, wiping out most of the gains from Wednesday. Ultimately, this is a market that has been struggling in general, as we have seen the bottom of the previous downtrend channel offer resistance based upon “market memory.” This makes a certain amount of sense, as the market had gotten ahead of itself during the previous session. Whether or not this means we break down from here might be a completely different question, and I think the most likely of scenarios will probably be that the market simply grind away.
Keep in mind that as we head into the weekend it will be interesting to pay close attention to how things close, because that can tell us quite a bit about how traders feel. If they are more than willing to take risk on into the weekend, that is a good sign. However, if we sell off drastically on Friday, that may open up quite a bit of downward pressure towards the 1.12 level, the bottom that we recently had tested.
To the upside, the 1.14 handle continues to be important, as it has been resistive multiple times over the last several weeks. If we can break above that level, then I think we go looking towards the 50 day EMA, which is closer to the 1.1450 level. That is an area that I think will attract a certain amount of attention, but quite frankly it is not as important as the 1.14 level, so I think we probably do have the ability to break above it. After that, then the 1.16 level is where I see the next major selloff happening. If you squint, you can even make out a bit of an ascending wedge forming, so that could also be another technical reason to think that perhaps we fall.
Keep in mind that the European Central Bank continues to be very loose with its monetary policy, while the Federal Reserve is stepping away from tapering. That in and of itself could but downward pressure on this pair, but if we get more of a “risk off attitude” around the world, that also drives up the value of the US dollar. I do not have any interest in trying to get too cute with this pair, am simply looking for opportunities to start shorting on signs of exhaustion.
Read More: Euro Pulls Back From Previous Trendline