Tight Markets Are The Rule Today: Levels For The EUR/USD

The coming vote on tax reform in the U.S. House of Representatives may open things up across the forex and equities markets.

Shain Vernier•Tuesday, December 19, 2017•1 min read

It is becoming very clear that traders and investors are placing a great deal of emphasis on today’s tax reform vote in the U.S. House of Representatives. The indices are still in the red, led by the DJIA down 50 and the S&P 500 off seven. The forex majors have also traded in a tight range during the U.S. session.

Crude oil is up moderately, while gold has fallen. It looks as though we may be in for some late day fireworks following the 1:30 PM EST tax reform vote.

EUR/USD Technicals

Active trading around the holidays is always a challenge. Many of the big money players have already left the market in favor of vacation, influencing liquidity greatly. Today’s action in the EUR/USD is a prime example of a pre-holiday tight trading range.

For now, the EUR/USD is in a heavy rotational pattern. Price is non-committal, in the center of November’s range. Here are the support and resistance levels for the remainder of the session:

Resistance(1): Daily SMA, 1.1842
Resistance(2): Last week’s high, 1.1862
Support(1): Bollinger MP, 1.1793
Support(2): 20 Day EMA, 1.1792

Bottom Line: In such a tight market, selling resistance and buying support is an affordable way to capitalize upon a mean reversion strategy. Profit targets must be modest, but a short scalping plan from the Daily SMA area around 1.1842 will be good for 8-15 pips using a 1:1 R/R management scenario.

There just isn’t a lot of participation across the markets currently. If you are going to become active, keep the targets modest and stops tight!

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ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.