It’s no secret that EURUSD has lacked direction for quite some time. The pair has been range-bound since early 2015 following the 3,500 pip landslide that took place between May of 2014 and March of 2015.
The range between 1.0460 and 1.1700, which is really just consolidation, wasn’t a surprising development. Any time a market makes such a drastic move in a short period, some sideways movement is expected.
But that doesn’t mean we can’t find opportunities within the upper and lower boundaries of this range.
There have been two notable trade setups over the past nine months with the first being last October’s break below channel support. The second and more recent opportunity came on May 3rd when the pair formed a bearish pin bar from the previously mentioned channel support, which was then acting as resistance.
The move that followed last month’s Brexit triggered yet another breakdown at a critical support level. This time, it was channel support that extends from the December 2015 low, which later rejected the advance on July 5th.
While the intraday chart below isn’t nearly as compelling as the breakouts I just mentioned, the idea is in line with the prevailing trend, which has been bearish for more than two years now. It’s also congruent with the July 24th close below channel support.
For now, this is merely an idea and one that I’ll be watching carefully over the next 24 to 48 hours. A move lower from current levels would encounter support at post-Brexit lows near 1.0940 followed by the March 10th ECB low at 1.0820.
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