Last time EUR prices hit current 1.3525 levels, the price failed to break not only the all important 1.3450 level but also the daily average at about 1.3515 and so allowed EUR/USD to travel back to 1.3800's. This EUR/USD trip appears to be quite different for many reasons.
Number one reason is the daily average not only broke at 1.3569 but the close at 1.3525 was far below 69, 44 pips to be exact. Second, the 5, 10, 20, 50 and 100 day averages all broke cleanly and remains at a safe distance in the low to mid 3600's to consider those levels won't see a break higher. What remains to break is the current 200 and 253 day averages at 1.3439 and 1.3363. Both averages were safely above the must break at 1.3450 last time EUR/USD was at current levels. Third, EUR/USD targets last trip didn't yet call for a break of 1.3450 rather targets calculated in the low 1.3500's.
Lastly only a close above 1.3567 targets prices back to 1.3675 but a shorter term average exists at 1.3625, a 1500 + day average at 1.3651 as well as the 20 day exists at 1.3651. The problem with rosy scenario is targets factor to the mid 1.3450's and don't call for the 1.3450 break yet. The current 5 day average at extremes factors to 1.3459, 10 day 1.3492 and 20 day 1.3411. This scenario reveals any further price drops leaves EUR/USD more overold and ready for a bounce. And secondly, it may take an impulsive news announcement and thrust for 1.3450 to break. Our range current then becomes a tight 1.3457 - 1.3651.
Strategy. A break of 1.3550 and 1.3554 will test the daily average at 1.3567. If 1.3567 breaks higher, the target is 1.3678. So levels to break above and Long / Short lines then becomes 1.3614 ( 10 day average), 1.3618 ( 5 day average), 1.3621, 1.3625, 1.3651 and 1.3674. A break of 1.3567 sees then price extremes and long points below at 1.3510 ( 5 day), 1.3521 ( 10 day) and 1.3425 ( 20 day).
The downside for the days ahead not only needs a break at 1.3491 but prices are clear to target 1.3457, 1.3452, 1.3440, 1.3359 and 1.3311. Overall, I see another rangy do nothing week for the EUR/USD unless an impetus occurs that thrusts prices through the all important 1.3450 levels.
Brian Twomey, Inside the Currency Market, btwomey.com