EUR/USD: Levels, Ranges, Targets, False Bottoms

EUR/USD closed Friday 1.1246 while the reported Bottom for Friday was 1.1245 and 1.1273. Wednesday, Thursday and Friday last week offerred ” The False Bottom” at 1.1301.

False Bottoms as is my own term is a price concept not seen very often. The RBA to lower AUD in light of RBA Statements and Big Glenn Stevens speeches attempted to employ the “False Bottom” concept but always failed. The RBNZ and NZD was always a bit more successful, not often.

Its a question of timing as central banks never ask themselves or know if their currency pair is overbought or oversold, where can we drive prices to and at what bottom price. Central banks don’t evaluate such concepts to be honest. My models are the central bank models but refactored to address concepts of overbought, oversold and much more.

Central banks view currency prices in a larger picture so abstract, it leaves concepts of reality. Alred North Whitehead in 1924 stated it best as ” Fallacy of Misplaced Concreteness”. Abstract thoughts, beliefs and concepts become misplaced as reality.

The motivation by central banks in “False Bottoms” is to force down the price of a currency pair. The “False Bottom” concept is rarely seen by the ECB so quite interesting. More interesting is to take the playbook from the RBA because the RBA perfected False Bottoms. Again, big changes coming to ECB July 1 and long term speculation is the ECB will turn Euro into AUD and slow EUR speed and cut overall ranges.

EUR/USD Bottom. 1.1203. Normalized again. Target achieves by breaks 1.1231, 1.1217, 1.1203 Bottom.

Upper Targets 1.1309, 1.1288 and Failure Point at 1.1267.

Vital points above 1.1457, 1.1390, 1.1354, 1.1323, 1.1270 to 1.1278, don’t touch this area.

Vital points below 1.1207, 1.1157, 1.1144, 1.1069, Monthly average 1.`1090. Note Bottom 1.1203 V 1.1207.

Good points to reload longs for the day because EUR/USD price remains dead flat on the floor for very short term.

Brian Twomey, Inside the Currency Market,



Alfred North Whitehead coined the 1924 phrase ‘ Fallacy of Concreteness” in relation to rejection to spatial and temporal locations. The simple assumption is abstract beliefs, concepts and opinions are accepted as concrete reality. Freud stated it best as Narcissim of Small Differences in relation to intra group conflict and dynamics as it further relates to the excess of fine tuning. Whitehead and Freud relate to the Fed, DXY and WTI relationships.

March’s Fed statement finally stated Fed monetary policy. Lower WTI, lower DXY and higher equities to raise the elusive, phantom number called CPI. In the 1970’s, CPI hit 20% and central banks lacked ability to lower it while the year 2008 to present, CPI is the phantom concept whereby central banks lack ability to raise it. Central banks tell us WTI and Oil contribute to CPI but how much.

In the RBA and RBNZ example, Oil provides 0.2 to CPI. Australia CPI is currently 1.3% or as a decimal 0.013 so add 0.2 then CPI becomes 0.213 or 2.1% and at the CPI target. The old textbook definition of CPI is a loss of purchasing power of money and capital. The Dangling Modifier in central bank speak is why higher CPI is vital and how to achieve targets in an 8 year accommodotive easy money policy.

The conundrum in the Fed’s monetary policy in regards to WTI and DXY is both correlate perfectly negative at high 90% from monthly averages 1 to 10 years. This means as DXY prices travel higher, WTI prices travel lower and vice versa. High Correlations in this magnitude contains ability to literally linger for years unless significant breaks are seen from the averages. While significant breaks lack ability for this month, the concept to lower DXY and WTI blows yet another credibility hole inside Fed speak.

Like DXY and EUR/USD, WTI trades between 1 and 2 year monthly averages from 43.02 to 55.27 or 12 points. DXY monthly averages trade between 96.87 to 93.97 and currently at the lower range. For WTI to go higher, DXY must break 93.97 and WTI lower must break DXY at 96.87. Neither breaks are expected for the remainder of the month.

WTI in the larger picture from trend lines 1 to 10 years is the price not only trades far below the lines but WTI prices are flat dead on an historic floor. Far below trend lines means any price rises are corrections inside the current massive downtrend. Problem with lower WTI prices is it will take more time as the lines need more time to descend. At the same time, DXY sits just below trend lines. Just as EUR/USD is waiting on the DXY and Fed directional move, WTI stands ready to move as well but until the FED decides the Fallacy of Misplaced Concreteness then WTI ranges and meanders.

To understand corrections, the best targets on averages from 1 to 10 years is 59.00 yet massive hurdles exist on the way and the targets are slated only for the remainder of the month.

To go higher, WTI must break 49.31, 50.90, 51.48, 51.62, 53.02, 53.29, 53.99 then 54.04 and 54.48. Range tops are found at 60.23, 60.36, 60.69, and 62.89 further out.

Bottoms are not only protected but out of range begins from 46.38, 46.34, 46.21, 45.42, 45.34 and 44.94. Out of range prices are sell and buy gifts. Trade the points and levels as indicated.

Interested see blog site for data and trend line pictures.

DXY is massively steep and WTI dead on the floor. If the Fed fails in whatever attempt today’s monetary may be and DXY falls then WTI on a long term long basis is a terrific trade.