I am still waiting for a long term entry to short the EU and we 'could' be at an important cross-roads. The Daily Currency Barometer is showing a tight pairing for the EUR and USD. Currencies cannot stay paired for very long (macro economics won't allow that to happen) and when they break apart, we usually see a fairly big move. On average, these moves push 180-240% of standard daily ATR's. For the EU, that would be about 120 pips. We still don't know if the break will push the EU higher or lower, but at least we know the move is coming.
This larger impulse has been building for a long time. Look at the 4 hour chart below. With the exception of a few quickly corrected news spikes, the EUR and USD have been channeling sideways for quite awhile. A sideways channel on the Currency Barometer has the same effect as a sideways . When the range is breached, the pair will run.
Our macro (weekly) barometer shows the EUR backing off of up trending support a bit, but this is not a bounce. Not yet. It just means that we have a little room to push down before we test support. I still need to see a move below support before I jump into a long term trade. Until then, I'm watching and waiting. I still play the short term moves (i.e. yesterday's spike), but I can't justify a position trade just yet. The macro fundamentals still support a longer term for the EU, but recent data is mixed. Probably why we are bouncing inside a range.
Yesterday's spike was easily timed with the Short Term Barometer. We were able to catch the top within about 5 pips. I will continue to trade the short impulses until I see a clear indication of a longer term trend. If the current price action begins to look longer term, I'll post my entry rules. Until then, I will continue to trade short term price moves and wait for confirmation of a longer term trend direction.
This is not investment advice, just my opinion(s). Please trade accordingly.
Trade safe and keep an eye on news.