EURUSD Low and Looming Volatility Breakout

Navigating the FX market in 2019 hasn’t been easy.  It never is but this year has been especially difficult.  Record low volatility (EURUSD in particular) is the main culprit.  It’s tough to extract profits as an outright trader when price changes are minimal!  For example, it’s mid-October and the EURUSD range so far this year is 691 pips (1.1570 to 1.0879).  If that range holds up through year end (for the record, I don’t think it will), it would be the smallest yearly range ever.  Here’s the good news.  EURUSD is following through on long term reversal signals (chart and comments from 10/1 shown below) and daily ATR (see below) bottomed in May.  The chart of daily ATR itself is interesting.  It’s impossible not to notice 65 pips as important.  A move above 65 pips in ATR would signal a volatility breakout…some would call it a paradigm shift.  Get ready!

-Jamie Saettele

-@JamieSaettele

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EURUSD Daily

EURUSD Daily (from 10/1 Swing Update)

EURUSD low is right on the lower parallel of the channel from the Sep 2018 high and a few pips below the line that crosses lows since Nov 2017.  The immediate reaction off of these lines bodes well for reversal prospects.  DXY reversed from a parallel that crosses price extremes over the last 7+ years (see below).  RSI divergences, DeMark (weekly and daily), short term sentiment (EURUSD DSI was 9 after Monday’s close), and the return of comments about ‘King Dollar’ in the media etc. all ‘favor’ a larger EURUSD reversal.  1.0917 (high volume level) is proposed support.  1.1027/68 is the first reaction zone on the upside.

DXY Weekly (from 10/1 Swing Update)