The EUR/USD Enters a Zone of Major Resistance

The EUR/USD has a number of hurdles to overcome before a ceiling it established. I am looking for a ceiling – for now – since the market trend has transitioned into a sideways range. IT IS early in the transition but a “V” bottom is unlikely here with the underlying fundamental picture and the 1.3050 to 1.3200 area is a thick layer of resistance.

I’m not going bearish on the dollar nor bullish on the euro in a longer-term picture. For now I will watch for a trading range to develop in each. There is not a complete enough picture to drive either into a trend yet, although Ben Bernanke did give the greenback a strong shove…off a cliff.

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The EUR/USD has traded higher into the resistance on the daily timeframe. This area – while 150 pips wide – is still a reasonable range for the pair to exhaust within considering the average daily pip movement. The expectation for exhaustion comes from the sideways market trend that has formed as the 34EMA Wave moves at a “two to four o’clock” angle. IF the 34EMA Wave were to begin traveling upwards at a “twelve to two o’clock” angle, the expectation would then be for higher lows and higher highs.

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The “Price movement range by day of week” has an average of 150 pips per day Monday through Thursday. This makes the 150 pip range resistance area on the daily a possible single session trading range.

One thing to note as a follow up to my last update: The 50 period SMA close was blown out of the water by the dollar’s sell-off and now must be considered near-term support. The pair is now battling at the 1.3100 major psychological level which is still 100 pips from top of the trading range I have highlighted in this update.