• Historically, extremes revert to a 'norm' which could mean breakouts and/or trend changes
• A particularly small daily EURUSD range may have fewer structural issues than the S&P 500's grind higher
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Both EURUSD and the S&P 500 are showing signs of extreme quiet - often an indication that conditions will snap back to 'normal' resulting in volatility, breakouts and sometimes trend changes. Yet, there are a number of factors to take into consideration when assessing a market's level of activity. Technical pictures of these two benchmarks alone would suggest certainly that breakouts are highly likely. Yet, we have just recently passed through a holiday trading conditions and now are entering the least active trading month of the year. Furthermore, there is key event risk strategically placed at the end of the week. And, then there is always the possibility of 'structural' versus 'temporary' developments. We discuss this concept and its trading implications in today's Forex Strategy Video.
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