The EURUSD is making new trading lows, extending the trading range for the day in the process (it is now 79 pips – still short of the 22 day average range of 113 pips). The pair is testing the next target level (see Forex Technical Analysis: EURUSD settles down as the afternoon progresses ) at the 1.2660 level. This is the low from November 2012 (see chart below). The low reached 1.26584. The buyers against the support make sense on the first look. Risk is limited.
EURUSD tests 1.2660 – low from Nov 2012
The action in the EURUSD has kept the bearish bias from yesterday when the price could not extend above the ceiling area at the 1.2838-44 and then stayed below the 100 hour MA in the NY session. Today, the 200 hour MA was breached briefly (green line in the chart below) but that was quickly reversed. The price was able to stay below the 50% retracement of the move up from the October 10 low at the 1.27433 (see hourly chart below). The 1.2704 level was also breached (see hourly chart below). This was the low from October 16 and near the low from earlier today (in the Asian session). the price spiked above this level as NY traders entered for the day, but then used the level as a ceiling on the next hour (blue circle 3). This should be ceiling now.
EURUSD stepping lower. Look for the price to remain below the 1.2704 on the hourly now.
With the range still narrow, there is room for an extension (lower) and I feel that is still the path of least resistance for the pair. Patient sellers should wait for the 1.2684-92 area (38.2-50% of the move down from the last peak – see chart bel0w).
EURUSD should find seller in the yellow area now.
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