TechnoMeter

The EUR/USD range is certainly testing traders’ patience, but those who remain disciplined and keep their powder dry are likely to be presented with a momentum-move relatively soon. Ranges don’t last forever. This is one of the tightest in the euro’s existence and getting tighter as price is wedging up into a triangle. A resolution is closing in.
This coming week we have the ECB on Thursday, but there isn’t any grand expectation for it to be a market-moving event. However, as per usual, expect the unexpected; you never know what the last grain of sand will be to collapse the pile (in this case, a breakout in either direction). Regardless of what the catalyst is – big, small, expected, unexpected, of the technical variety – when the range/wedge is finally broken a sizable move should begin.



In either event, the move should be relatively large, with the size of the pattern pointing to about a 400-pip drive higher or lower upon a breakout. It’s always possible we see a fake-out breakout followed by a reversal in the opposite direction, but we’ll first run with what is presented to us and adjust accordingly, if need be.

For those looking for short-term ‘fade-trades’ off levels, a strategy we’ve been highlighting in recent weeks, the risk/reward profile is quickly diminishing with price action tightening up. At this juncture, waiting for a breakout appears to be the most prudent play.

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