As the week moves closer toward key events tomorrow and Friday (ECB meeting and NFP report), the pair is looking for the markets directional preference. Since rallying on Monday, the price has been moving up and down. The price sits near the 100 and 200 hour MAs which are starting to converge (indicative of a market that is unsure of direction from here). The 100 hour MA is at 1.2895 (blue line in chart above). The 200 hour MA (green line) is 1.2909. An old trend line off the September high comes in at the 1.2909 level as well. This line has now been breached twice, but the market may still look toward the level for bias clues (especially since it is on top of the 200 hour MA).
Traders will likely be searching for directional clues from these levels. The range for the day is still a modest 60 pips vs about a 110 average for the last 20 days. With the price holding the 100 hour MA on the last dip and the price trying to move above the 200 hour MA currently, the longs are trying to stake their claim. Will it pan out? The activity is quiet enough to fizzle out. It will depend on the target levels being breached.
So for today, stay above the 100 hour MA, and the 200 hour MA, and the targets above include:
- The close from yesterday at 1.2918 .
- Above that the high for the day is not too far away at the 1.2936.
- The 1.2944 and the high for the week at 1.2967 are next in line.
On the downside, a move back below the 100 hour MA and
- The low floor near 1.2876 becomes the next nut to crack. This can also be looked at as a neckline of a head and shoulder formation.
- A move below should open the door for further momentum selling.
The non trending clues from the chart are indicative of a market that is unsure. There will be a break away at some point. It is time to follow the clues.