EURUSD going no where, but will it move outside the comfort zone?

It is a quasi US holiday (Columbus Day), I know but the market is off to a very slow start to the week. One thing I look at is the range vs. the average true range over the last 22 trading days. It gives me a sense of relative volatility and a clue that perhaps the day has the potential for a range extension. The chart below shows just that. The EURUSD has a 44 pip trading range. The 22 day average is 109 pips. That 44 pips represents 41% of what is normal and if the day were to be more normal that would imply a 65 pip extension of the extremes.

If you believe that the range will not stay so confined, then look for a break. You can then look at some of your charts to see if there is any bias (bullish or bearish). You can also define and limit your risk if you are wrong.

The EURUSD is up on the day. The price moved higher in the European/London session making new highs at 1.13963. This took out the high price from Friday at 1.1387 area. That rate higher to solicited more buying but it failed (bearish) and traders took the price back down toward lower trendline support (see blue circle 3 - A little more bullish?)). The correction off that low extended between the 38.2 to 50% of the move down. Holding that "correction zone" keeps the sellers more in control intraday (more bearish intraday).

What next? If the sellers are to remain in control, they should keep the price below the 1.1380-84 area (RISK level). If the sellers are to remain in control, they should break the lower trend line at 1.1364 currently and stay below that line. From there, you look for a move to and through the lows and the range extension at 1.1352. How far do we go? Look for other targets on other charts.

The hourly chart below has the 1.13169-1.13356 as a congestion area. That would be a range extension target on a slow day.

Needless to say the market can go either way. If the market were so sure of the direction, it would be heading in that direction already. What we as traders need to focus on is the price action and tools applied to that price action. From that we can see if there are any clues as to the bias that "the market" wants to take. The above gives me a little more bearish from recent action. If right, and the price extends the range lower, I am happy. If it does not I go home with a small loss.

POP QUIZ. If you are more bullish, what might your trade be and risk if you expect a range extension higher?