Euro Failed to Confirm Break so EUR/USD Back In Range

This is your weekly analysis of the EUR/USD.  This is a longer term view of the major currency pair than what is analyzed in the (posted) daily analysis.

On Thursday and Friday in the daily analysis, I said that we needed confirmation for the breakout.  False breakouts remain a high probability thus confirmation is needed.  The pair did no confirm the break and finished the week well off the high.  Thus the pair remains within the range.

The EUR/USD is not a high probability to range trade, even though over the past weeks range trading would have been profitable.  This is because the USD is a trending currency, which means ranges within pairs which contain the USD are unlikely to be sustained for long periods of time.  Most traders, especially longer term traders, will find it beneficial to back off during times such as these and wait for a trending move to occur.

From the daily chart we can see that the trend is still down.  A confirmed break above 1.3750 has a target of 1.4030.  This would serve in breaking the downward trendline and potentially setting up a larger reversal…but price action in between will determine that and if it occurs we will analyze that next week.

The weekly average range for the pair is about 300 pips, so with a close of 1.3602 we would need to see an above average move to reach the target this week.

A confirmed break below 1.3430 would target 1.3140.  This would mean a 5th wave (third leg) down and a continuation of the downtrend.

Based on the price action we have seen, this market is very choppy and there is no need to anticipate which direction the market will go.  Wait for a breakout and then a confirmation (a retest or pullback towards the breakout point, the level holds up and a renewed push in the breakout direction occurs).  The targets are not likely to be seen this week so patience is the key in this market.

EUR/USD - Daily - FreeStockCharts.com

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Cory Mitchell, CMT
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