Look for sellers on rallies

The EURUSD traded between the 100 and 200 hour MAs since breaking below the 100 hour MA on Friday (see yellow area in the chart below). That was the case into today until the 200 hour MA was broken. The buyers shyed away, and the price fell.

The move lower took the price from 1.1460 area to 1.14115. That was just short of the 61.8% at 1.14063. That level and the 1.14000 are the next targets on the downside. The 200 hour MA at 1.1460 was support that was broken. It is now resistance on a corrective test.

We are also seeing a correction after the weaker than expected Empire Manufacturing data. That has helped to push the price toward the 100 bar MA on the 5-minute chart and into the 38.2% to 50% of the move down today (between 1.1441-50 - see yellow area on the chart below). If the sellers are to keep control, I would expect sellers to lean against the area here. A move above will look back toward that 200 hour MA.

* Trading in the GBPUSD, EURUSD can have fits of volatility as a result of the UK Brexit vote later this afternoon (evening in London).

Risk will be sky high at the time with expectations for multiple big figure moves. How it all plays out is anyone's guess.

However, for traders, the most important thing is understanding the difference between trading and gambling.

Trading is about understanding and controling risk (win or lose). Gambling is about having the attitude that "win or lose, have a booze" and focusing solely on reward.

I focus on risk and at times risk is outside my boundaries. At the vote time, this will be one of those instances.

You need to decide for yourself your risk tolerance.

ING posted a cheat sheet for the different scenarios. It does not mean it will come to fruitiion and liquidity flows can lead to moves back and forth, but you get the idea from the scenarios, the level of risk traders will face.

Trade smart.