Yesterday, the EURUSD enjoyed a trend day higher. Today it is enjoying a non – trend day with a lower bias. The combination has the bulls(buyers) and some bears (sellers) fighting it out (which has me on my toes).

Bullish arguments.

  1. The trend started from Monday morning’s low (NY Morning). The move to the top has totaled 192 pips. The correction lower today 45 pips. This is well above the 38.2% of the move up (at 1.24129),
  2. The price just found support against the highs from August 6th (1.2442) and August 7th (1.24407). The low today 1.2442 (see chart above)
  3. Potential Bull flag (see hourly chart below). Holding the support at 1.2442 and extending above the upper trend line at the 1.2475 area should solicit another momentum leg higher
  4. Is that the best the sellers can do? They are not really taking control from the buyers who overwhelmed the market yesterday.

The bears arguments.

  1. The market tried to take the price above the Asian high in the London morning and failed (1.2470 vs 1.24774 high for London high),
  2. There are lower lows and lower highs,
  3. The price has been moving above and below the 100 and 200 bar MA today on the shorter 5 minute chart. The last move has taken the price below those two moving averages again (see red and green areas in the 5 minute chart below). Those MAs come in at 1.2461/63 currently (see blue and green line in the chart below).
  4. No follow through momentum from yesterday’s move. Where are the buyers from yesterday?

Clues that there could be some action in NY.

  1. The range is a pitiful 37 pips from high to low for the day
  2. Non- trending transitions into trending. In an hour or so, it will have had a range of 46 pips (not seen since day after Christmas in 2011)
  3. Housing data out at 10 AM and the FOMC meeting minutes later today
  4. Yesterday there was good buying and good volume. There should be some players out there still. It can’t just disappear, can it?

There are other clues from the charts I am sure, but safe to say, there is a consolidation battle going on today. The market will need an energy boost. A move below the low and the bottom trend line would tilt the downside with a further correction to 1.24129 retracement level (of the move up from Monday low). Conversely, a move above the 1.2461/63 MAs on the 5 minute chart should increase the bullish bias for a run at the top trend line at 1.2475.

The lines area drawn in the sand. Let the trading games…..continue.