Large option expires today
The EURUSD cracked below the 1.0900 area and moved to yet another low for the year. The pair has not traded this low since September 2017.
Today their are a large option expire at 10 AM. At 1.0900 there are 2.3B of option expires and at 1.0875 there is another 1.5B expires. The low on the break of the 1.0900 level scooted down to 1.0884. The price is back up to 1.0897. PS The low from last week stalled just above the 1.0900 level at 1.09038. Falling below that level also weakened the technicals for the pair.
If there is an large option expire, it behooves those who are short to keep the price near the option level (the option will decay toward 0). If it moves away from that price, traders who are short a bunch, may be forced to hedge. Hence the potential for volatility if pushed through a strike price with momentum.
The move to the downside was also helped today by a move back below the 1.0923-263 area. Those levels were home to lows from September 3 and September 12 (see yellow area on the hourly chart above).
Last week the price broke below those lows on Thursday briefly but quickly rebounded. Howver, by the end of the day the price moved below the level.
On Friday, after the low bottomed at the 1.09038, the price moved back above that key swing area at 1.0923 – 263 and stayed above (see red shaded area). The fall back below today tilted the bias back to the downside.
Watch the 1.0900 area and the 1.0923-26 area as topside resistance now ((risk for shorrts). Stay below keeps the sellers in control.
Looking at the daily chart below, the pair is testing a low trend line at the 1.0886 level. A move below will open up the downside more.
On the weekly chart, there is a gap between 1.0776 to 1.8200.
