EUR-USD in Consolidation

By: Mike Kulej

The EUR-USD had been in a steady uptrend since early until the news of Ireland banking crisis took center stage. During that time, the Euro advanced from 1.1875 to a high of 1.4280, a very strong appreciation. Recently, though, the price dropped to 1.3445.

Now that the Ireland bailout plan is place, the EUR-USD appears a little directionless. It is consolidating on the intermediate term chart, without too many clues pointing towards the next move. The price is contained between 1.3440 and 1.3785 and currently resides in the middle of this range, drifting downwards.

This consolidation zone may hold for the rest week. Thursday is a Thanksgiving holiday in the U.S.A, with both Wednesday and Friday historically light trading days because of that. Barring development of new, big fundamental news, there might not be enough activity to move the EUR-USD decisively either way.

In this case, the Stochastic indicator should be very useful for trading. It works best during periods of trendless markets, often correctly indicating oversold and overbought conditions. Should the breakout happen, it will most likely indicate the direction of the next, longer-term move in the Euro- Dollar pair.


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