EUR/USD Analysis: Awaiting Volatility in the Coming Week
With EUR/USD treading water within a tight range, let’s take a trip through the timeframes to explore where the balance of probability lies.
Weekly Timeframe: Tightest Range in Over a Year
Last week’s trading range on EUR/USD was tiny at less than 90 points. To put this into context, prior to last week, EUR/USD weekly average true range was 168 points. We haven’t seen a weekly range this tight in more than 12-months.
A tight weekly range signals volatility contraction, and given the cyclical nature of price volatility, last week’s tight range indicates that the market could be due for some explosive range expansion – putting traders on high alert.
EUR/USD Weekly Candle Chart
Past performance is not a reliable indicator of future results
Daily Timeframe: Maintaining Higher Swing Lows
On the daily candle chart, despite recent weakness, the market structure reveals a pattern of higher swing lows, forming ascending trendlines. This indicates that strategically buying bullish ‘fakeouts’ from support levels could be a sensible strategy.
EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
4hr Timeframe: Navigating the Range
Zooming into the 4hr candle chart, we can define the recent trading range with more clarity. Given the backdrop of tight range contraction, waiting for the range to break decisively in either direction could see significant follow through on the 4hr timeframe.
EUR/USD 4hr Candle Chart
Past performance is not a reliable indicator of future results
Risk Management
Those looking to take trades in EUR/USD should consider incorporating ATR into their stop placement as this will dynamically account for current levels of price volatility.
On the economic calendar this week, key events include European HICP inflation rate data for December and Federal Reserve Beige Book, alongside December retail sales figures on Wednesday. Thursday sees the release of the European Central Bank's meeting minutes, and Friday brings the University of Michigan January consumer sentiment survey.
Disclaimer: This is for information and learning purposes only and is intended for UK audiences. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Weekly Timeframe: Tightest Range in Over a Year
Last week’s trading range on EUR/USD was tiny at less than 90 points. To put this into context, prior to last week, EUR/USD weekly average true range was 168 points. We haven’t seen a weekly range this tight in more than 12-months.
A tight weekly range signals volatility contraction, and given the cyclical nature of price volatility, last week’s tight range indicates that the market could be due for some explosive range expansion – putting traders on high alert.
EUR/USD Weekly Candle Chart
Daily Timeframe: Maintaining Higher Swing Lows
On the daily candle chart, despite recent weakness, the market structure reveals a pattern of higher swing lows, forming ascending trendlines. This indicates that strategically buying bullish ‘fakeouts’ from support levels could be a sensible strategy.
EUR/USD Daily Candle Chart
4hr Timeframe: Navigating the Range
Zooming into the 4hr candle chart, we can define the recent trading range with more clarity. Given the backdrop of tight range contraction, waiting for the range to break decisively in either direction could see significant follow through on the 4hr timeframe.
EUR/USD 4hr Candle Chart
Risk Management
Those looking to take trades in EUR/USD should consider incorporating ATR into their stop placement as this will dynamically account for current levels of price volatility.
On the economic calendar this week, key events include European HICP inflation rate data for December and Federal Reserve Beige Book, alongside December retail sales figures on Wednesday. Thursday sees the release of the European Central Bank's meeting minutes, and Friday brings the University of Michigan January consumer sentiment survey.
Disclaimer: This is for information and learning purposes only and is intended for UK audiences. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.