Yields on debt are up again in Italy and Spain, but so are German yields as Moody’s lowered its outlook to negative on the country’s AAA credit rating. They cited the rising uncertainty.
The EURUSD has held up in spite of the news, although the bias as NY enters is still more bearish.
The high to low trading range is a low 55 pips vs. a 20 day average of 111 pips currently. This suggests that there will be an extension higher or lower at some point today. The high for the day extended to 1.21369. This was just above the lifetime midpoint of 1.2131 but close enough. The price is below the 100 and 200 bar MA on the 5 minute chart at the 1.2111 and 1.2117 levels respectively (see 5 minute chart). In order for the bulls to take back some control, they must take the price back above these MAs.
Other targets to break above, should the bias turn around with the price below the shorter term MA include:
- 1.2116 – Close from yesterday’s trading (between the 100 and 200 bar MA so it would confirm the upside if broken)
- 1.2143-49 – Low from Friday and the 38.2% of the trend move down from the Friday high.
- 1.2162 was the low from last Monday
- 1.2174 – 50% of the move down from the Friday high and the low from July 16. A move above this level would have traders questioning the break lower from Friday.
On the downside, there is support at the lows from yesterday at the 1.2081 and 1.20669. Below that the next downside targets include:
- 1.2045 – Low going back to June 11th, 2010. The market based at this level on a correction and surged forward
- 1.2008 – A high from June 8th and low from June 10 2010
- 1.1982 – Trend line on the monthly connecting the low from 2005 at 1.1639 to the low from June 2010 at 1.1876
