EUR/USD Is Showing Sustained Weakness: A Look At This Week’s GAP
Shain Vernier • 1 min read
As my colleague Skerdian covered earlier in the U.S. session brief, the elections in Germany brought no surprises as Angela Merkel held onto the reigns for another term. The euro did not like this development one bit, opening Sunday’s trade gap down.
Over the past few months, I have talked about trading gaps in price action according to Stiedlmeyer's market profile philosophy. It can be tough to get in on a gap trade, but the scenarios are profitable.
Let’s set up today’s EUR/USD gap and how to play it.
Today’s EUR/USD open at 1.1896 saw a precipitous drop in pricing from Friday’s close of 1.1946.
EUR/USD, Daily Chart
This market is firmly under the control of fundamental traders taking an intermediate-term bearish view facing the euro. As this week’s trade unfolds, the technical roadmap is fairly straightforward:
While not technically a true “gap,” the area between 1.1900 and 1.1936 has seen limited participation over the last two sessions.
Bollinger MP at 1.1904
Key support level at 1.1826, 62% retracement on the weekly time frame.
Overview: This market remains very fluid. As of this writing, price is below Last week’s low of 1.1861 and trending lower. As this market develops on a weekly timeframe, a regression back towards our thin gap area of 1.1900 to 1.1936 is likely.
Bottom Line: For now, this market is in trend mode down. However, I will be watching for signs of fatigue as we near the 62% Fibonacci level. With a bit of luck, a defined setup will be coming our way in the near future.