For the third day in a row, the trading range entering the NY day is narrow with the pairs high to low trading range at 67 pips. On Tuesday, the price trended higher. Yesterday, the range was extended above and below as a result of the FOMC volatility. What is there today to get the range extended?
From a technical perspective the price is below yesterday’s close at the 1.2704, but entered the NY trading day near the high for the London session. The price has since fallen back to the midpoint of the London’s trading range at the 1.26695 level – rejecting that move higher. There was a report that UK banks might be downgraded that has contributed to the risk off trade.
With the market skittish and non trending, I take the clue from that action to conclude it (i.e., the market”) does not know which way it wants to go from here. The buyers and the sellers are balanced. A decision will have to be made at some point between ultimately getting above the 1.2740-45 ceiling or moving (and staying below) the 100 hour MA/50% retracement area (see hourly chart). For clues, I will be eying the key technical levels and look for a break. Traders could also use the extremes for better trade location (assuming no position).
On the downside, I have to continue to give the 100 hour MA and the 50% retracement the respect on the downside. Those levels come in at the 1.2652 and 1.26485 level respectively. Yesterday, the price dipped below these levels but moved back higher. Today, the price did the same. Move below these levels and a break of the low from yesterday at the 1.2634 opens the door for further downside. Trend line at 1.2624 and the 200 hour MA at the 1.2600 would be the next targets.
On the topside, the close from yesterday at 1.2704 and the topside trendline at 1.2714 will be the closest key hurdles to overcome. Above that the highs for the week at 1.2729, 1.2741 and 1.2745 will need to be breached to open the upside.
