Something more than what we experienced in March?
Let’s start by looking at the Daily Chart.
First, looking at the daily chart, the last 54 days of trading (nearly 3 trading months) has seen a 402 pip trading range. The high was on February 16 at 1.2555 (more on that high later). The low reached 1.2153 on March 1st.
Over the 54 days, there have been a number of ups and downs (see the red box in the chart above) In fact, there have been 28 up days and 26 down days. That is pretty even.
The midpoint of the range comes in at 1.23542. The current price is below that midpoint thanks to the tumble on Wednesday.
If a midpoint of a range is a barometer for bullish above/bearish below. With the price currently below that midpoint, the bias is negative.
What happened at the extremes over the last 54 days?
On the downside, there was a swing low on January 18 at 1.2164 and it took until March 1st for the price to trade lower. That low came in at 1.2153.
So there was a break of a key low, but that break failed quickly after 11 pips. That’s not a lot of momentum.
On the topside, the first swing high was reached on January 25th at 1.25366. On February 16th, that high was taken out and the price moved up to 1.2555. That extreme break of 19 pips is not a lot of momentum.
The market is saying from those failures, “I am unsure of the next major move”. Putting it a different way, the sellers had their chance to break and take it lower and they chickened out. The buyers had their chance to take the price higher and they chickened out. That is what the price action says. So we sit in the middle.
Is that all bad?
There are trading opportunities, but it is mostly intraday swings. That is why recently I look/post mostly from the hourly chart each day.
Eventually though, you have to anticipate a break. The best time to do that is when the markets been non-trending for a while. That’s right now.
So are there any other clues from the daily chart that are key as we head into April?
- There is a trend line that cuts across at 1.2274. Getting and staying below is more bearish.
- The 1.2205-14 are swing lows in January and February (see green circles)
- If you take away the March 1 swing low to 1.2153, the range for March is only 238 pips (low of 1.2238 and high of 1.2476) That is a very, very low trading range.
- The blue MA line is the 100 day MA. It is at 1.2111 and moving higher toward the low extreme at about 7 pips per day pace. In about 7 trading days the MA will reach the low extreme prices at 1.2153-64. That will increase that areas importance as a technical area in April
In summary, the daily chart is saying:
- Non trending for nearly 3 months of trading
- Up and down trading
- The price is below the 50% midpoint. More bearish.
- The 1.2274 is a trend line target to get and stay below. Move below is more bearish.
- The 1.2210 is a swing level to eye. Move below is more bearish
- The 1.2153-64 is home to swing lows. Move below is more bearish
- The 100 day MA is at 1.2111 but moving higher by about 7 pips every day. In 7 or so trading days, it will be at the lower extreme increasing that area’s importance for bullish/bearish bias.
If the price, goes above the 50% midpoint at 1.23542, the bias starts to feel more bullish.
- The swing highs at 1.2445 (March 7 and 8 highs),
- 1.2476 (high for March),
- 1.2522, 1.25366 and 1.2555 (the highs from January and February) are targets.
There are two other key levels I will be focused on in the new trading month. That comes from the monthly chart.
Taking a broader look at the monthly chart.
The chart below is the monthly chart of the EURUSD.
The first area of importance from a technical perspective on that chart is that the 100 month MA (blue line in the chart) comes in at 1.2518. The 38.2% of the move down from the 2008 high is also right near that level at 1.25165 (only 1 1/2 pips apart).
The high in March reached 1.2476 – below that key MA and retracement. That kept a bearish bias. Sellers are leaning.
In February, the MA was at 1.2545. The high reached 1.2555. That was a big failure. The buyers blew it. More bearish.
On Monday (new month), the 100 month MA is expected to fall by about 25 pips to around 1.2493 (give or take). Keep that in mind. A move above that MA in April, would be more bullish and target the topside trend line at 1.2640 (see chart above).
Those are key levels for the pair on a more bullish run. Again, that would manifest from more bullish moves on the daily chart first, including getting above the 50% and taking out the swing highs.
That seems pretty obvious but be aware of that 100 month MA. Since we are anticipating more of a trend (after nearly 3 months of non-trend), we can’t rule a break higher. Here’s why….
The narrow trading range and why it is important.
There is one final technical point as we head into a new trading month.
That is, if you throw out the first trading day of the month in March, the trading range was only 238 pips (it was 322 in total with March 1 included).
Historically, there have only been 4 months when the range was at or below that range level over a calendar month. The lower chart in the chart above shows the pip range for each calendar month. The green numbered circles are the only months where the range was at or less than 238 pips going back 10 years. That is not a lot of months.
Again, I am fudging the results as the range for the month was 322 pips with March 1 included. However, the point is on a running month of trading basis, the range will be 238 pips after Monday’s trading. That is non-trending.
What I know is non-trending transitions to trending (and/or bigger ranges). So traders have a reason to anticipate something bigger and better as far as high/low pip ranges in April.
Do we get a more trend-like move too?
After nearly 3 months of non-trend, up and down, the time may be ripe for a trend in a directional basis as well.
So anticipate a trend-like possibility.
How will we know?
Start taking out the technical levels outlined above.
One final note, is that although the bias is more bearish now (below the midpoint of the range), the price can rocket higher too. REMEMBER, we are still above the 100 day MA. So as a trader, we need to be true to the technicals. Listen to what they are saying, even if you don’t like the fundamental story.
This is a long post, and who knows how April will turn out, but I hope you learned from it too.
Here are some key points:
- March is done and dusted and the market stayed in the near three month trading range.
- The range was narrow inclusive of March 1, and really narrow sans March 1.
- That gives traders the reason to anticipate a larger trading range
- The up and downs over the last 3 months also suggest that the pair is getting ready to transition from non-trending to trending.
- As a result, it is wise to be on the lookout for a trend-like move too (either higher or lower).
- Follow the technical levels for the clues. They provide nice stepping stones.
PS. I got a reminder on Facebook, that “Attacking Currency Trends” is 7 years old. Lots of the breakdown from above, you can learn in the book.
I always liked to sign the book, “Remember, attack the trends in your trading and your life”.
Maybe April will give us some trends in our trading (be on the lookout). As for your life, lookout for those good trends to follow and be sure to attack them too.