Hello everyone! As you've already noticed from the title, I don't believe EURUSD has bottomed. Yesterday I shared an idea about why I think the DXY hasn't topped either, and as the DXY mostly consists of EUR, it is impossible for me to think that the USD won't strengthen vs the EUR. However in the short term EURUSD could go higher, and I could even see it go up to 1.10, without that meaning that the downtrend is over.
The fact that the market tested 1.03-1.04 again is pretty bearish, and the bounce is mostly due to the fact that things got pretty extreme. Essentially the market got extremely oversold, and therefore the most important support actually held. The problem though is that the structure is clearly bearish, as double bottoms tend to break and we haven't seen any significant higher highs and higher lows yet.
Getting above above 1.045-1.05 was the first key indication that the bounce would have legs, as the market reclaimed the Yearly S3 and Monthly S1, along with the horizontal support. Now it has reclaimed the 1.064 level and therefore I wouldn't be surprised if it properly retested the 1.08 breakdown level. I also wouldn't be surprised if it rallied up to 1.095 to sweep the highs there, as that breakdown wasn't properly retested and the highs not properly swept.
To me this is more of a dead cat bounce for the Euro which got extremely oversold, while rates in Europe could go higher and rates in the US lower. The case for higher rates in the EU can be justified a lot more easily that ones in the US, but at the end I believe the ECB is in a worse position than the Fed. Why? Because they need to support all the weak countries, while European energy is too expensive and the population a lot older. Hence the 1.08-1.095 is great for shorting, and as long as the market doesn't close above 1.12 I remain bearish.
The fact that the market tested 1.03-1.04 again is pretty bearish, and the bounce is mostly due to the fact that things got pretty extreme. Essentially the market got extremely oversold, and therefore the most important support actually held. The problem though is that the structure is clearly bearish, as double bottoms tend to break and we haven't seen any significant higher highs and higher lows yet.
Getting above above 1.045-1.05 was the first key indication that the bounce would have legs, as the market reclaimed the Yearly S3 and Monthly S1, along with the horizontal support. Now it has reclaimed the 1.064 level and therefore I wouldn't be surprised if it properly retested the 1.08 breakdown level. I also wouldn't be surprised if it rallied up to 1.095 to sweep the highs there, as that breakdown wasn't properly retested and the highs not properly swept.
To me this is more of a dead cat bounce for the Euro which got extremely oversold, while rates in Europe could go higher and rates in the US lower. The case for higher rates in the EU can be justified a lot more easily that ones in the US, but at the end I believe the ECB is in a worse position than the Fed. Why? Because they need to support all the weak countries, while European energy is too expensive and the population a lot older. Hence the 1.08-1.095 is great for shorting, and as long as the market doesn't close above 1.12 I remain bearish.
