Whether it was the ubiquitous stop hunting or simply the drying up of sellers, the EURUSD fell below the key support at the 1.3282-88 area and reached a low of 1.3276. However, the selling ceased and the price has rebounded higher (see chart above). On the 5 minute chart below the move below support and rejection is more clear. In fact on the 2nd test lower, the 1.3282 level held and has helped with the ensuing profit taking.

Now what? Looking at the 5 minute chart the road to the downside has been …eh ok. Concerns are that the opportunity existed for the downside to be explored especially on the break below the key support area (at 1.3282-88). It did not. This suggests the traders are still short term in nature and happy to “fall in like” with the market, and not “fall in love” with a trend.

A gauge of the markets opinion will be on the correction. If the price can stay below the 38.2% level at 1.33129 (which also corresponds with the low in the asian session), would be good. Another test of the key support at 1.3282 may be in store for the NY afternoon trading.

A move above this level and subsequently above the 1.3224 would water down the bearishness we have seen today. It would suggest to me that the sellers were just in for a joy ride today – that’s it. I will then go back to the drawing board, looking for bullish or bearish clues.