Comes off the lowest trading range week of the year and lowest since Thanksgiving week 2015
The EURUSD is off to a really slow start today with a trading range of 23 pips.
This comes off the back of a 126 pip trading range for the trading week last week. That range was the lowest range for the calendar year, and the lowest since 124 pips during the Thanksgiving week in 2015. That in turn was the lowest since Christmas week 2014. Other low volatility facts, the last 3 weeks have seen ranges of 134 pips during the week of September 11, 134 pips during the week of September 18 and last weeks 126 pips.
The point is, the market pulse in this pair was near flat-lined. The patient is near dead.
Is it time to bring it back to life?
Well non trending transitions to trending. So it is time to keep eyes open and look for a momentum move.
One barometer that might give a bullish or bearish signal is off the same weekly chart above. Last week, the price closed above the 100 week MA. This week that MA comes in at the 1.1210 area. Stay above it and that might be a bullish clue to build on. Move below and the winds of change might be shifted to the downside. The low today has bottomed at 1.1220 so far. Keep that level in mind. Traders may look to lean against the level as a risk defining level. If there is a catalyst, the technical traders may start to point to it (kinda like I am doing now).
Drilling down to the daily chart, what levels are in play on those charts?
The price low from Friday tested the 200 day MA (green line in the chart above). That MA comes in at 1.11603. The 100 day MA is higher at 1.1182. Lower trend line support comes in at 1.1153 currently. Those are key levels below that if broken, should lead to further momentum to the downside (with 1.1122, 1.10839 and trend line support at 1.1022 the next targets).
ON the topside on this chart, the topside trend line cuts across at the 1.1272 level. A move above that level would be more bullish and should see a momentum move toward the next topside trend line at 1.13183. A break of that opens the upside more (1.13658 and 1.1435-65 the next targets).
The current price is move bullish being above the 100 and 200 hour MA (and the 50% of the move up from the Brexit low (at 1.11377) but we are still below trend line resistance above. So we are bullish but there is more work to be done.
Drilling down to the hourly chart, the 100 and 200 hour MAs are sticking out to me from a technical perspective. Those two moving averages are converged at the 1.1217 level. We just moved below that level off of the better than expected US ISM data, but there is a quick rebound back higher. As the market digests the data keep an eye on that moving average level for bullish above/ bearish below clues.
The drill down is a bit long, but when the market is struggling with direction, it requires a careful look at the levels that are in play. The market traders are simply unsure. However, if you can get in the technical minds of longer term traders (weekly and daily) and drill down into the intermediate traders (from the hourly), you can get a feel for what levels are important to them. It is often at those levels that momentum moves begin (and then extend). So be aware. React. And if you catch the momentum - if the market breaks out of the doldrums, you have the potential to catch a pretty good wave.
Time will tell. We will see. Be aware.
