EUR/USD has continually flipped from one extreme to another rising from the
Should this happen again, the next move will be a rally that could see the pair push toward last year's high at 1.1276.
Periods beyond either extreme have been brief, though the time spent toward or below the base of the 20-day Bollinger bands has been longer, and that's because traders are gambling on a rise.
Where the liquidation of longs has a more enduring influence - trapping the pair at the base of the Bollinger bands for longer - pullbacks from peaks have been sharp, with moves intensified by the weight of long positions.
The current drop, which has lasted the whole of this month, began at 1.1139 in late December after traders had staked over $20 billion on euro rising.
Those bets had been trimmed to $6 billion on Jan 23 when EUR/USD reached 1.0822, and have probably been pared further during this week's slide to a 7-week low at 1.0796.
That low, which is close to a 50 percent retracement of the underlying Oct- Dec uptrend from 1.0448 to 1.1139, took EUR/USD further below the base of the 20-day Bollinger bands resulting in a rebound to 1.0843.
That lifted EUR/USD from 1.0724 to 1.1139.
A move of a similar extent would threaten last year's high.
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