The EURUSD broke higher (was it the CPI or just the market looking to get out of the doldrums). The narrow trading range going into NY has been extended and traders will now look for the 1.3108 level to hold. This is the 38.2% of the last surge higher in the pair (where the break started). If buyers are “real” and want to trend, they should hold this level (and shorts will likely get squeezed).
On the hourly chart below the 200 hour MA is a place where the price has been consolidating around (1.3125 currently). The broken 38.2% comes in at the 1.31128 level – not far from the support on the 5 minute. The next upside target becomes the 50% of the move down from March 8th at the 1.31467 and above that the 1.31806. A move back below the 1.3108-12 muddies the water a bit.
Momentum is key in these types of slower markets (remember yesterdays up and down accordian trading pattern?). Momentum slows and it says to traders “get out” . Consolidate, ok, but looking for the next break. The range is only 90 pips or so. There is room to roam.
PS Thanks travelkoen for pointing out the trendline is also being pierced. All the reason to expect to see more momentum if the move is legitimate with support.
