EUR/USD: Non-Volatile Downward Channel, Sellers in Firm Control

The picture is undeniably bearish. For the technical-type traders, this is one of the best environment to trade as the trend is evolving in a fairly regular and non-volatile manner. The moves up are very much corrective in nature while the decline are much more impulsive. These dynamics speak loud and clear about the clear supply imbalances, which is resulting in a conducive order flow if one is looking to engage in a purely technical-led momentum trade dismissing other factors. Why do I mention dismissing other factors? Because this is not a trend backed up by the German vs US bond yield spread, as the blue line clearly demonstrates (major divergence). It’s all about the rude strength of the DXY across the board as depicted by the magenta line. Regardless, when factoring intermarket analysis and volumes, one could make the case that any major technical area, as 1.1350–55 (horizontal support-bottom channel) could represent a solid proposition to stay relatively constructive in faking overextensions. However, one is going to need price action evidence for that, as the non-volatile/regular trends are the toughest to fight. If 1.1350 gives in, we could be looking into a potential acceleration towards 1.13. If the intermarket analysis stays as divergent vs price as it is today, that may create genuine buying opportunities.