The EURUSD moved above the 100 hour MA (blue line in the chart above) yesterday afternoon and remained above. The support buyers were strong enough to take the price up to the 200 hour MA (green line) at the 1.2958 level (high reached 1.2959) where sellers entered. Why not? Risk was defined and limited. Moreover, the trend line connecting the highs from Sept 19 and Sept 21 was also in the area (at 1.2961), as was the 38.2% of the move down from the September 17 high (at 1.2963). What a great level to sell for those awake and trading. The market did what it tends to do.
I call the dynamic where the price trades between widened MA’s (100 and 200 hour MAs) “Trading Between the Goal Posts” . When the MA’s are spread like this, being above one is incentive to buy (with a stop below), but moving above the other is not that easy. So sellers tend to take profit at the other extreme (i.e. , the 200 hour MA in the chart). Eventually the price will break but traders can use the levels to lean against and define risk in the meantime.
Remember the 1.29148 level from earlier in the week? This was the 38.2% of the months range. The price is back down near this level. The 100 hour MA is also below at the 1.29017. Look for traders to use the levels in trading today.
No need to make it any more complicated than that. Watch the extremes. Look for the break.
Break above targets:
- 1.2974 – Low from Feb
- 1.2994-1.3010 – Lows from March and April 2012
- 1.30029 – 50% of the move down from September 17
Break below targets:
- 1.2893 – 50% of the move up from yesterday
- 1.2878 – 61.8 of the move up from yesterday
- 1.2823 – 200 day MA