The EURUSD is moving higher in trading today with a slew of data to come. The pair is finding comfort in a trend line that keeps on giving to traders focused on defining risk.
Looking at the hourly chart in the EURUSD, there is a longggg trend line that attracts market attention on tests (see chart below). Sure there have been a few failed instances – and one more relevant break that was taken back today – but overall there is a reaction when the line is tested or broken.
In trading late yesterday and today, the line was first tested (at 7) and then broken on the back of the SNB comments. The correction lower from the highs today, has found support buyers against the line once again (at 8). If risk can be defined and limited, smart traders will use the level to lean against. That seems to be the pattern.
EURUSD hourly chart finds traders attracted to the trend line for risk defining levels.
Other technical comments of note for the pair today:
- The low for the EURUSD came in around the 1.12225 area. This is comfortably above the the key 1.1209 level which is the 61.8% retracement of the move up from the 2000 year low and the 2008 high. This level is an important line in the sand for traders this week. Stay above bullish, move below bearish. That is what we are seeing so far this week.
- Above the 100 hour moving average will be the next key level to surpass if there is to be a further corrective move to the upside. The 100 hour moving average (blue line in the chart above) currently comes in at 1.1364 (and moving lower).
- Not far away from the 100 hour moving average is the 1.1372 resistance target. That level is the low from November 2003. when the market fell below this level, last Thursday, traders used the level to lean against on the sell side prior to the ECB meeting that day.
Overall, the pair is more bullish/corrective as the market moving news is now all known and out (i.e., ECB and Greece election). Today the US will be the focus as US durable goods ,Case Shiller Home price data for November, the Market PMI service and composite index, new home sales, consumers confidence and Richmond Fed manufacturing all come out. That is a lot on the economic menu to sift through. The bias is a touch more bullish as the day begins. There are also a number of earnings releases today from P&G to Caterpillar to Freeport McMoran and all are moaning about the currency impact on earnings. This too might soften the dollar a bit as stocks head south in pre-US market trading .
Watch that old trend line on dips. It seems to be a line that is being eyed and used by traders (risk defining level).
