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The EURUSD driving average is located at 1.0805. Recall past writings. The target on a break of the 5 year average at 1.1400's was 1.0800 but EUR/USD decided to travel an additional 800 pips to 0.9500 bottoms.
DXY 95 break at the 5 year average targeted 103.00's and decided to travel an additional 1100 pips to 114.00's. The EUR/USD drop to 0.9500's and DXY rise to 114.00's was unaccounted by 5 and 50 year averages or 600 monthly averages. Where was the true average? 60, 80 year monthly averages.
In the life of trading and markets, we may never see again a market price so over and undervalued to trade at 50 year averages, especially from normal currencies such as EUR/USD and DXY. Only cross pairs and JPY contains ability to trade to such extraordinary depths yet remains rare.
For the first time since March 22 when EUR/USD broke below 1.0800, EURUSD at 1.0223 normalized to account for a respectable average but only for the short term. Longer term, EUR/USD remains deeply oversold from target averages at 1.1100's, 1.1300's and 1.1600's.
Next targets longer term are found at 1.0592, 1.0798 and 1.0967 upon a break at 1.0805. Not only is EUR/USD oversold but its price remains extrardinarily low. Short term, next targets are located at 1.0375, 1.0417 and 1.0592.
Massive supports from rising averages are located at 1.0044, 1.0004 and many averages at 0.9900's.
Higher EUR/USD faces the challenge of seasonality when EUR/USD begins its 6 month drop from December/ January to May/June while DXY and USD/JPY begins its 6 month rise for the same period December/ January to May /June. EUR/USD trades its lowest lows for the year in January.
Next week
Main drivers this week as well as next week are USD and non USD currencies. Cross pairs follow. Best trades are EURUSD and GBPUSD then USDJPY and USDCAD.
EURUSD trades overbought and due for a correction to 1.0168 and 1.0127 easily.
DXY faces massive hurdles at 109.25, 110.20 then 111.00's and 112.00's. DXY from 107.00's and 5 and 50 year averages at 95.00's and 96.00's reveals DXY and USD currencies contain a long long way to drop. Next target for next week is 106.26.
USDJPY break below current 142.64 was not only extrardinarily but this average held for the past year. We're long for next week to target 140.00's and 141.00's.
USDCAD as written last week held at 1.3600's. From last week, 1.3418 broke and traded to 1.3284 lows. Break of 1.3380 targets higher for USDCAD.
GBPUSD target at 1.1887 achieved 1.1775. Next week targets high 1.1600 as GBP/USD big break is located low 1.1600's to trade much lower.
AUDUSD trades comfortably above 0.6599 and only a break at 0.6647 challenges 0.6599. Short for next week remain the overall strategy however a higher AUD would serve a better short trade for maximum profits. Same for NZD.
GBP/AUD drives EUR/AUD at GBP/AUD 1.7589. EUR/AUD holds comfortably above 1.5236. Divergence between GBP/AUD and EUR/AUD builds and both may remain last on the trade rank list.
GBP/JPY must clear above 165.27 to travel higher and allow all JPY cross pairs to follow. Last week's post, break 165.72 targets 164.00. GBP/JPY traded to low 163.00's.
Overall next week is a range trade week.
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