Forex technical analysis: EURUSD trades in narrow range. Why bother?

Author: Greg Michalowski | Category: Education

It ain't going anywhere except if it goes somewhere

The EURUSD traded in a 40 pip trading range yesterday. Phish.  
Today the range is only 29 pips. Phish (again).


Why bother with this pair. It ain't going anywhere.

Maybe now, but I learned a long time ago that Non-trending leads to a trend.  The market is non-trending.  So look out for a break and run.  What a "trend" means?  We really do not know, but if we can catch a break and run, it can be a low risk trading opportunity. 

So what levels are "in play" for a break road map?

Looking at the hourly chart, the 1.0922 level was lows from April 25/26. Yesterday the high peaked at 1.09233. Today the high peaked at 1.09247.  IF the price trades above that 1.0922-247 area, look for momentum higher.

Now admittedly, we traded above that area 3 separate times with most of the time above, occurring on the 25th and 26th (the high reached 1.0950).  On April 27th, there was a spike above that was quickly reversed (high reached 1.0932). On April 28th, the 3 hourly bars closed above (the high reached 1.09466).  ON a break, the road map higher will include getting through those highs. They don't disappear. They can stall the break higher, but if the price can get above the 1.0922-247, that will turn the ceiling to a floor. Stay above, more bullish. Move below, more bearish (the break is a failure).

On the downside, the The 1.0885 is the 50% of the range since the French election gap move higher. The 1.0882 is another swing level.  Yesterday, the price held that level (red circle 3). On Friday there was another swing low (red circle 2) at that level.  On April 27th, a swing high was established at the level (red circle 1).  

If the price moves below that level/area, look for momentum.  Like on the break higher, the road map lower on that break is full of some pot holes. The 200 hour MA (green line in the chart comes in at 1.08592, and then the 200 day MA at 1.08358 is another key level to get to and through.  Those targets do not disappear. They can stall the break lower, but if the price can get below the 1.0882-85, that will turn the floor to ceiling. Stay below, more bearish. Move back above, more bullish (the break is a failure).

Yes, we are in a narrow trading range, so why bother? The answer is because, the narrow range defines break points and road maps for breaks.  At some point, non trend will lead to a trend.  So be aware.  Look for little price nuances and anticipate the future from the inaction today.