It Is A Tight One:More Consolidation In The EUR/USD

Posted Monday, February 26, 2018 by
Shain Vernier • 2 min read

The USD is seemingly in a holding pattern across the majors. Investors are taking a passive stance toward the market today, with heavy rotation defining the EUR/USD, GBP/USD, and the AUD/USD. While the daily ranges are not too small, price action is confined between support and resistance levels in each of these pairs.

Perhaps the pairing showing the greatest degree of consolidation is the EUR/USD. At press time, volatility is very limited, with action near the 1.2300 handle after rejecting topside resistance. Let’s take a look at the daily timeframe and break down the action.

EUR/USD Technicals

A proximity test of the Daily SMA was issued earlier, posting an intraday high of 1.2354. The area surrounding the 1.2300 handle has attracted two-way participation for the last three sessions.

EUR/USD, Daily Chart

When markets become extremely tight, a breakout is often developing. As we near the end of February, be on the lookout for institutional players balancing their books. Heavy volumes may be on display as profit taking or risk management activities are executed ahead of month’s end.

Here are the key levels to watch for the remainder of the session:

  • Resistance(1): Bollinger MP, 1.2319
  • Resistance(2): Daily SMA, 1.2362
  • Support(1): Feb. Swing Low, 1.2234

Overview: Several events are scheduled for the coming 24 hours that may rustle the EUR/USD out of its slumber. The M3 Money Supply, speeches from ECB officials and German Buba President Weidmann, or the CPI out of Germany may move the Euro against many of the majors.

For now, I will be taking a wait and see approach to this market. Upon price leaving the range of the past three sessions, an entry with the intraday trend may set up. Until then, be sure to check out the signals page for ideas on how to engage products across the forex.

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