Falls below 200 day MA on BOJ flows, but back where it all started
The EURUSD fell below the key 200 day MA on the BOJ headlines, stalled at the end of end of August lows at the 1.1122 level, and then recovered, moved to new highs in the London morning session and in the process extended back above the 200 day MA at 1.11475. Back to where it all started. The 200 day MA has stalled the fall in the EURUSD over the prior 3 trading days. Back to where it the break started.
The last few hours has seen the price move above and below that 200 day MA at 1.11475. The high on the rebound extended to 1.1158. The low to 1.1138 - basically +/- 10 pips around the MA level (see 5 -minute chart below). Traders trading and taking a few pips (and I mean a few pips).
Today - before the Fed - will likely be filed with back and forth action. It could flatline. It could extend and fail. Or squeeze. Flows will dominate. Traders will likely trade - taking a few pips if the market is kind to them. .
Putting a Fibonnaci on the move down from yesterday's peak (it was the high for the week - see chart below), the price has corrected about 38.2% (1.11566 is that level). A move above that will look toward the 1.1167. The 100 hour MA is at 1.11847 (and moving down) and the 100 day MA is at 1.11929. Possible to get there? If it got to that level it would only represent a range of 70 or so pips for the day. That is not that much.
Now getting to those extremes above is possible, but it will likely be difficult. Nevertheless, with the Fed expected to remain on hold, that way implies a weaker dollar (more dovish Fed).
On the other side, a move below the 200 day MA and the 1.1138 level will look to a retest of the 1.1122 lows/trend line/end of August low. A break of that level opens up the downside. The next target would be the 1.1097 (low from May - see daily chart) and then 1.10839 (61.8% off the daily chart). To get to 1.1083 (possible before Fed but unlikely), it might take some work but it is only 64 or so pips away. That is not that much of a move.
These levels are in play before the Fed. They are in play after the Fed. If the outer extremes are breached (at 1.1191 and the 100 day MA above and at 1.1083 and the 61.8% retracement below), that should give traders a more bullish or bearish bias going forward. Of course much will depend on what the FOMC and Yellen say, but it is a plan.