The EUR/USD pair broke higher during the course of the session on Tuesday, but as you can see found enough resistance near the 1.10 level to turn things back around and form a massive shooting star. This shooting star is just about as perfect as you can find one, and most certainly at the perfect spot. With that, we feel that the market should continue to go lower, especially if we break down below the bottom of the range. If we break down below there, we feel that the market will then head back down to the 1.05 level, and continue the downtrend that we’ve seen for so long. Ultimately, we believe that this market will break down below there, and perhaps head to the parity level given enough time. We have no interest whatsoever in buying this market, because quite frankly there is so much in the way of resistance above.
We believe that the European Central Bank will continue to liquefy the markets, and as a result it’s very likely that the European stock markets will continue to go higher, but the Euro currency itself is in fact going to bear the brunt of the market participation. As the Euro continues to sell off, it makes sense that the US dollar continues to strengthen. As we see shooting stars in almost all of the Euro related pairs, we believe that the Euro is in fact going to suffer today. On the other hand, the US Dollar Index ended up forming a hammer, so it does in fact look like the US Dollar will continue to strengthen overall. If that’s the case, the market makes a lot of sense going lower from here. Even if we rally that this point in time, we are really not interested in buying as we believe that it’s only a matter of time before the sellers step back in and continue to punish the Euro. With this, we believe that the longer-term trend will continue and offer plenty of opportunities going forward. We sell breakdowns, just as we sell rallies.