Retests the highs from Friday

The EURUSD tumbled on Thursday below the 1.1260-79 floor area (see yellow area in the hourly chart below). This area was where there were a number of swing lows during the month of February. On Thursday, the price of the EURUSD fell below this level. On Friday, the price corrected up to as high as 1.1244, before moving to the downside.

On the opening today the price fell below one trend line (see chart below) but could not get below a second trend line and a corrective move higher began.

The correction higher has taken the price back toward the 38.2% retracement of the move down from Thursday's high (at 1.1243) and near the high price from Friday's trade at 1.1244 (high has reached 1.1240).

The range for the day is about 80 pips. This is still fairly light. So there is room for an extension should the price be able to get above the 1.1244 level. Having said that, the area could also see sellers now. So be on the lookout. Although the range is light, it is a congested area.

If the buyers are able to keep control and get above the resistance above the 1.1244 area, I would expect that sellers would line up against the 1.1260 to 1.1279 area.

After spending the entire month of February finding support against this area, I would not expect the shorts/sellers to succumb to the buyers on the first test of this level. The 50% retracement of the move down from Thursday's high (at 1.1269), and the 100 hour moving average (blue line in the chart below – currently at 1.1277, and moving lower) are also also in this area and should provide additional topside resistance.

If the sellers are to remain in control not only today but for this week (and going forward), staying below this area is a key line in the sand. What was strong support should now become strong resistance.

Looking at the 5 minute chart, the correction off the 1.1244 resistance has been the largest one of the day. However, the pair remains above the 38.2% of the trend move higher at the 1.1211. The 1.1209 is another support level (this is the 61.8% of the move up from the 2000 year low to the 2008 year high. – Not shown). So there is a bit of a battle going on. A move back below 1.1209 would help confirm the corrective high is likely in place.

Although the corrective buyers have ruled the day, any move higher today should find the going more difficult. I expect the sellers to be lurking and waiting to sell.