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EURUSD: Consolidating in a tight range

Since the start of the year the currency gained more than 1.5% however last week fell more than 0.5% and is in a well-established distribution phase since the end of last week.

Last week the EURUSD fell with a narrow range and close near the low of the week, in addition managed to within the previous week range, which suggests being slightly on the bearish side of neutral.

The second consecutive inside week represents a high degree of market compression and as a consequence we may expect an explosive move in the near future.

Stochastic is showing a strong bearish momentum although is well below the 50 mid line.

Expecting a downward move to a daily support at 1.0839 on a break below the previous week low at 1.1002 (scenario 1) however a breakout above the previous week high at 1.1186 could trigger a rally up to a weekly resistance at 1.1533 (scenario 2).