It seems like we’ve been here before.
The EURUSD is trading around the 100 hour MA (blue line in the chart below at 1.2241 currently) after moving sharply lower on Merkel/Asmussen comments. Yesterday the price moved below the level on Bernanke comments but rebounded sharply as the price first rebounded above the level, then accelerated on some pretty good short covering.
The high reached off the move yesterday and into today did not take out the weeks high. So 1/2 way through the week, the 142 pips range for the week is lower than the narrow 172 pips (so far at least) from last week. This is unusual so I am keeping an eye on that extension that makes the market more “normal” (i.e. taking out of the high or the low for the week).
The rebound to and above the 100 hour MA has the sellers a bit nervous in early NY trade (the thoughts of yesterday are fresh). Sellers will need to take control. The 38.2% of the last trend leg down in at 1.22459. The midpoint of the same move comes in at 1.2255. Stay below and the bears/sellers remain in control. Move above and they are not. The market is more balanced (and/or the market remains nervous and wary of a sustained move).
If the move lower can conetinue, the bottom trend line at the 1.2202 (see hourly chart above), becomes a key target to get below. Below that the lows from the week at 1.2188, 1.2174 and Friday’s low at 1.21619 become the steps for the next step to 1.2131.
On the topside, a move above the 1.2255 has the 200 hour MA (green line in the hourly chart above at 1.2263 and then the 1.2278 (trend line), 1.2287 (low from June 1), and highs for the week at 1.2306 and 1.2316 as the steps higher for the pair. A move above the high should ignite some additional momentum buying.
