Falling ATR Pointing to Range Bound EURUSD
A steadily falling ATR — Average True Range — is telling us that the price range for EURUSD, and all the other tradeable currency pairs, is shrinking. With price very close to the 50% retracement of the 2008 sell-off accompanied by shrinking volatility which the ATR reflects, I’m reminded of W.D. Gann’s theory that price will spend a high percentage of time between the .375 and .625 levels. This price band is an area which prominent Gann student T. Henning Murray refers to as “the pipe”. With the Euro currently already in “the pipe”, and most traders understanding that markets indeed spend more time tracking sideways rather than trending north and south, we could be in for more counter-trending markets going forward.
Jay Norris
www.trading-u.com
jnorris@brewerinvestmentgroup.com
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