A curious fall in volatility could be an indication of complacency in EUR/USD. With the potential for a game changing read on non-farm payrolls tonight, traders are on alert for a set up that combines a candle formation with a key support.

Here's the daily chart:

eur/usd daily chart

The green line at the bottom is the 20 day historic volatility. These low levels are unlikely to last. One scenario that would see volatility lift dramatically is a strong read on NFPs tonight - over the current consensus estimate of 220,000 new jobs for the month. If this translates to USD strength, markets could see a test of the support around 1.3785. Not only does this introduce the possibility of a breach and further downside, it would complete a three candle reversal pattern similar to an "evening star".

More cautious traders may wait for a break through 1.3785 before entering a short. For my trading plan, shorting here with a tight stop 1.3890. The plan is to take profit on half the position just above 1.3785, and hold the other half for a potential fall through the support level.