The "old" year low eyed below
The EURUSD - like the market i n general - is trading in a narrow range today. As the London fixing comes and goes and traders in Europe move closer to the exits, the pair is trading near the low for the day at the 1.07218 level. The price is currently trading at 1.0731.
Looking at the daily chart, the price high yesterday extended into the key swing area going back to May 2015. There have been a number of swing levels in that area from 1.0777 to 1.0821 going back to that date. The high yesterday peaked at 1.07955. The high today came in at 1.07847. The 38.2% of the move down from the election day high comes in at 1.08157 level. That area(up to 1.0821) is a line in the sand for shorts. Stay below is more bearish. Move above, and the pairs bearishness starts to break down technically. The price moves back into the meat of the trading range again after the look below. Until then, however, the sellers are more in control.
On the downside there is work to do to convince sellers that the recent highs were a corrective move. Specifically, the 1.07086 level represents the "old" year low from early January. Until November, that price looked like it would be it....
After the election, however, as US yields soared and the dollar roared, that low was taken out. The price rotated down to a triple bottom at 1.0517-21 and although a lower low was reached yesterday on the back of the Italian referendum results, it was only for a brief moment before buyers reemerged. That buying was strong and it ended up taking the price back above the 1.0708 level.
What now?
Well, the price action is SLOW. The NY trading range is 28 pips. The range for the day is only about 69 pips. That is not a lot. Looking at the 5 minute chart, the pair is staying below the 100 and 200 bar MAs on that chart at the 1.0751-53 area. Stay below is a closer bearish line in the sand now.
On the downside, the 1.0708 level will be eyed. Get below that level and more selling will be eyed.
