Greece on the brink
The EURUSD is trading down on the day after trading at new highs going back to Feb 6th on Friday. Greece concerns helped to weaken the common currency and perhaps a little hope the US data might start to turn around going forward. Fed's Evans did not raise any panic alarms when he spoke on a panel in Stockholm. Traders are also looking for that reversal point in the EURUSD after rallying 1004 pips from the low of 1.04615 in March, to the high on Friday at 1.14658. Is a 1000 pip correction a nice round number to stall the rise and head back lower? It will need some fundamental help, but technically there are some clues from today's trade that gives the shorts something to lean against. What might those clues be?
The high today came in at the 1.1449 level. Looking at the daily chart above, that high corresponds nicely with the highs we have been using (talking about) going back to February 2015. During the period from Feb 13 to Feb 19th there were a number of highs which pushed against this ceiling without breaking higher. On Thursday of last week, the pair stalled against the level. Friday's high extended above but the close was just below the level at the 1.1446 area.
As a result, that becomes the early week line in the sand for shorts this week.
Is there a level closer in to lean against now that the 1.1449 level held? Looking at the hourly chart, The 1.1420 area was a high from Friday, then provided some early day support in trading today before breaking lower. The London correction took the price to a high of 1.1423 before reversing lower. So I would expect that if the price is to stay more offered, this would be a closer level to define and limit risk.
Overall, the range for the EURUSD is narrow at about 85 pips. The average over the last 22 trading days is around 140 pips. It is Monday with a light calendar, but there still can be an extension. ON the downside trend line support and the 100 hour MA come in at 1.1358 and 1.1351 respectively. Other support levels come in at the 38.2% at 1.1337 and below that the 1.1216-23 area (see yellow area in the chart below).
Shaping up as a more important level if the bears are to take more control, is the 200 hour MA (green line in the chart below) and the 50% of the move up from the May 11 low. Those levels come in at the 1.1293 (for the 200 hour MA - it is going higher) and the 1.1298 level. When the 200 hour MA and the 50% retracement converge, it increases that levels importance technically (traders will typically buy against it). To get there today would be a stretch as there are a number of levels before then. So the sledding will be tough, but if the bears can keep the selling going, it has the potential to be on the radar into tomorrows trading.
