All things being equal, this is a market that I think you continue to fade rallies and I do think that eventually we may go looking to the lows.
If we turn around and break down below the bottom of the candlestick for the trading session on Friday, then it’s possible that we could drop down to the 0.96 level again. Keep in mind that this is a market that is going to continue to pay close attention to the European Union and all the nastiness coming out of there, because quite frankly, nothing good is coming out of that region. Markets don’t go in one direction forever, and therefore you need to understand that this is a situation where you will get the occasional opportunity, and you need to look at signs of exhaustion after a rally to do so.
The 50-Day EMA is sitting right there at parity as well, so you need to pay close attention to that. In fact, the 50-Day EMA is a bit of a downtrend line, and therefore everything lines up to the downside sooner or later. Even if we break above there, I will need to see some type of change in the overall fundamental situation to make that connection to start buying as well. If we did break out above there, then the 200-Day EMA sits around the 1.05 level, which is a major resistance barrier.
All things being equal, this is a market that I think you continue to fade rallies and I do think that eventually we may go looking to the lows. However, nothing lasts forever, and of course momentum is one of those things that disappears quickly. It kind of comes and goes, so therefore it’s likely that we get short any opportunity that we can, especially as energy and inflation continues to be a major issue in the EU.