Volatility is down

The EURUSD has done what one might have expected it to do from a technical perspective in trading today.

  • The first move was a corrective one that saw the pair correct to the 50% of of the last trend leg down from yesterday. That level came in at 1.13637. That level also corresponded with the broken 50% of the move up from the August 19th low. That level came in at 1.13640. Two 50% retracement levels was good enough for traders to lean against to define and limit risk, and they did. The high price stalled at 1.13634 and the price reversed lower
  • The second move to the downside, fell to the 200 hour MA (green line in the chart above). That level comes in 1.1273 and the low came in at 1.12746. Risk once could be defined and limited, and traders have moved the price off that level. But as I type, the sellers are moving the price back toward key support (the correction took the price to 1.1307)

The overall volatility is down today. The low to high trading range is currently 89 pips average over the last 22 trading days has surged to 134 pips. - largely a reflection of the oversized trading ranges seen over the previous 5 days. Nevertheless, there is room to extend the range.

What do the buyers on the dip against the 200 hour MA want to see now?

On the way back down, the price has moved back below the 100 day MA. That MA comes in at 1.1317 and if you look a the hourly chart above, the price fell below the MA level and corrected up to it before heading to the test of the 200 hour MA. So the risk defining buyers below are looking for a move back above the 200 day MA to show that the selling may be over. Guess what the sellers what to see? Stay below the 200 day MA. That becomes the line in the sand above for traders right now. On the downside, a move below the 200 hour MA should solicit more selling (at 1.1273). Break and 1.1239 and 1.1213/15 become the next focused targets (1.1213/15 was highs from July 10 and August 12).

The market now awaits fundamental data in the form of the 2nd revision to the US second-quarter GDP. The expectations are for a rise to 3.2% from 2.3%. Personal consumption is expected to increase to 3.1% from 2.9%. Ryan has put up a great preview. In addition, initial jobless claims for the week of August 22 will be released with expectations for 274K vs. 277K. The continuing claims are expected to dip to 2248K vs. 2254K. At 10 AM US pending home sales for the month of July are expected to show a gain of 1.0% vs. -1.8% in June. Then there is Jackson Hole.

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