Longs this morning from 1.5121 targeted 1.5191, price dead stopped at 1.5172. Like EUR/JPY, EUR/AUD has a higher target unless 1.5131 breaks lower. This forecast may or may not be valid at the China open at 9:30 EST. China is using close prices, that’s like pricing currencies based on a moving average, its just not the 130 year tradition. For interested, FX Trader magazine at fxtradermagazine.com contains my article on the history of the Currency and Gold FIX and Gold since 1900. Or on my site way at the bottom somewhere.
EUR/AUD. Bottom 1.5056. Range break above 1.5253, Below 1.5010. As long as price holds above 1.5132 then target becomes 1.5219. Note however the range top at 1.5253. Like EUR/JPY, we want to watch for a possible failure just before 1.5219. Points on the way to 1.5219, next 1.5147, 1.5155, 1.5163, 1.5179, 1.5189, 1.5199, 1.5209, 1.5219.
A break of 1.5132 targets 1.5093 then the range bottom at 1.5056. On the way below 1.5117, 1.5101 then target at 1.5093 and 1.5056.
Oh volatility, a fictitious word that doesn’t apply to currency prices. The average EUR/USD range this morning was 57 pips and 58 pips this afternoon. 116 pips separated the Mean from the Median prices this morning and 127 pips this afternoon. Not an ounce of volatility exists in these markets. 100 pips even 200 pip moves hardly moves the needle. Today’s currency prices sit at the most compressed ranges since year 2000. Since 2000, ranges were about 500 pips daily then decreased every year since. Now we see 100 pip ranges and get excited to see a 150, 200 pip move. Its taken 15 years to see the current lowest compressed ranges. What will change increased ranges is a Fed Funds rate hike and hopefully many more by other central banks. What happened in the past 15 years was rate decreases and it compressed ranges down to nothing as what we see today. Price moves way back in the good old days on the screens saw not one pip moves like today but 2 and 3 pip moves at one time.
Brian Twomey, Inside the Currency Market, btwomey.com