• The EUR/USD has rallied a bit during the training session on Tuesday as we have seen a bit of a relief rally.

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• This is a market that had been a bit overdone, so it does make a lot of sense that we would see a bit of a bounce.
• At this point, my job is to simply sit on the sidelines and wait for signs of exhaustion that I can take advantage of.
• The very first signs of failure that I see on a rally, I am more than willing to jump in and take advantage of. This is a market that I think has further to go, but you can only expect the market to go in one direction for a somewhat limited amount of time.

The size of the candlestick is impressive, and it does suggest we might have a little bit of follow-through coming. However, I don’t think that’s a real fear now, especially as the parity level such an obvious resistance barrier. Not only do we have to worry about it the round figure, but we also must understand that the 50-Day EMA being there has a lot to say about where we are going next as well. Beyond that, you also must pay attention to bond yields, because they have a lot to say as to where we are going. If the market does approach the parity level, I think it’s only a matter of time before the exhaustion sets back in, and people start selling.

Outlook Unlikely to Change

On the other hand, if we turn around and break down below the lows that we have seen over the last several sessions, that would obviously be very bearish. To think that the trend has changed is a bit of a stretch, so I think at this point we are probably better served just letting the market do its thing, and then start shorting when it shows signs of trouble.

Ultimately, the European Union has far too many issues out there to think that the entire outlook is suddenly going to change. With this, I’m very interested in shorting near parity, if we even get there. I have no interest in buying the Euro anytime soon, as the rush toward safety continues to accelerate in pace. In fact, this is going to end up being an opportunity to pick up “cheap US dollars.”

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