The EURUSD is trading weaker today on reports that the ECB would look to add additional stimulus via corporate bond purchases. Although the report was denied, the headline sent the EURUSD down sharply as trader’s question 1.2800 handle for the common currency.
EURUSD showing bearish bias below the 100 hour MA (blue line).
Looking at the hourly chart, at the start of the week (see weekend video at CLICK HERE) I was looking for a break above 1.2780 or below the 100 hour MA (blue line) to set the tone for the directional bias. The move yesterday and into the early action today saw the move to the upside. However, the pair was NOT able to extend above the key ceiling level at the 1.2838-43 area (see yellow area near the top). This was key. Sellers against the risk defining level were rewarded when the price tumbled on the headline news.
The fall lower has broken below the 100 hour MA (blue line in the chart above) but it did find initial support at the 50% of the move up from the October 10th low (at 1.27433). However, note that the correction off that low, has found seller against the 100 hour MA (blue line in the chart above). Good for the sellers. They are remaining in control.
A break below the 50% at 1.27433 is still eyed. If done, the pair will next target the 200 hour MA at 1.27308. The 61.8% is at 1.27106 and is another target on a break lower today.
The line in the sand (i.e. risk) for traders is the 100 hour MA now at the 1.2782 level. If the price is to go down and if the sellers are to remain in control, the price should not trade above this MA level.
The combination of holding the topside ceiling, falling and holding below the 100 hour MA, has the bears in control. The range for the day is 96 pips which is still a little light vs the 22 day average for the pair at 113 pips. So there is further room to extend (and an extension can go further than what is average). Traders can lean against the 100 hour MA to define risk. Existing Home Sales will be released at 10 AM ET.
