Price & Time: EURUSD - Still In No Man’s Land?
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- EUR/USD stuck between two key long-term levels
- Break needed to trigger next important directional trend
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I have not had much conviction in the direction of EURUSD since early December. Since reversing sharply around the 61.8% retracement in time of last year’s March – August advance the exchange rate has not really done much of anything technically significant. My directional lack of conviction extends beyond just the near-term given the key spots where the euro has turned over the past few months.
As the chart above shows, the euro has been hemmed in by some by some pretty key long-term levels the past couple of quarters. First in August on the upside by the internal parallel of an Andrews pitchfork drawn from the 1995 (synthetic) EUR/USD high through the 2000 record traded low and the 2008 record traded high. Following this failure, EUR/USD traded down in December to an external parallel of an Andrews pitchfork drawn from the (synthetic) 1985 Plaza Accord low through the 1995 high and the 2000 low. (It is also worth pointing out that the median line of that same structure coincided almost perfectly with the all-time traded high in EUR/USD in 2008.) From this external parallel the exchange rate recovered smartly, but I really now need to see that level (currently just under 1.0600) convincingly broken to get excited about the prospects of another important leg lower materializing in EUR/USD. The same goes for the topside and the internal parallel around 1.1600. Below it, the exchange rate remains in “no man’s land”, above it and we can start talking about the start of a much more important counter-trend move.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.