The EURUSD has broken below the low for the day on the back of the Italy banking downgrade by Moody’s. The next target is the 1.2806-17 which was a support resistance area the last time the pair was at this area back in January (the market remembers – see the hourly chart below from January 2012). Below that the 1.2788 is bottom channel support from the move down from Friday’s high (see the current hourly chart above).
The bearish fundamentals are piling up for the EURUSD as outlined by Adam/Jamie and company throughout the day. The technical picture is also supportive despite the fact that there are target support areas approaching. Traders can use those levels as confirmation of the bias as well as profit taking levels (corrective bounce levels). If the price falls below the levels, do not ignore the move as the market is indeed trending.
ON the topside, until the price can get above the 100 and 200 bar MA on the 5 minute chart (at the least), the sellers remain in control. Trends are fast, directional and have larger trading ranges then normal. The move to the downside since May 1 has now extended to about 465 pips or so. That beats the 385i pip ranges that prevailed in March and April. Remember non trending transitions into trending and last few months have been non trending.
PS FYI, January range was 607 pips. This does not mean the market will trend indefinitely. However, unless the price can show technical bullish reasons, the sellers remain in control.
