The EURUSD has move above its 200 hour average the first time since June 28 in trading today. Admittedly, the first break in the Asian session failed the price back off toward a swing area near 1.00739. The decline could only reach 1.0080 before bouncing back to the upside. Momentum was seen on the second break in the early European session with the high price rising up to 1.01748. The price has backed off in the last few hours of trading with the early New York session low reaching 1.0118. The current prices trading at 1.0130
The low price last week extended to 0.99515 on Thursday after breaking below the parity level with momentum.
What's next?
Looking at the hourly chart above, the swing highs from July 8 stalled at 1.01906. Above that is the 38.2% retracement of the move down from the June 28 high that cuts across at 1.02047. Those two levels remain the next targets on further upside momentum. That "upside momentum" is dependent on the price staying above its 200 hour moving average. Buyers are making play today with the break above the 200 hour moving average of 1.00973 currently.
However, with the trend decline since the recent peak on June 27, the buyers have to prove that they can take and keep control. Moreover they need to continue to reach targets, some of which are minimum levels needed to prove that the buyers are serious. The 38.2% retracement, like the 200 hour moving average, is one of those targets that if not broken suggests that the correction is simply a modest one within what is a bearish trend.
As a result, though the price break of the 200 hour moving average is a significant step in that bullish direction, there is work to do by the buyers to prove that they mean business.
So what you traders do?
Buyers from below on the break in the 200 hour moving average, could simply use the 200 hour moving average as a risk level. Move below, and there should be disappointment on the failure. Stay above, and there's hope for further upside momentum. Trades at this level are risking a break below 200 hour moving average as well.
On the topside, and the short-term, watch the 1.01433 level. That was the low going back to July 7. From July 7 to July 11, the area between 1.0134 and 1.01432 had a number of swing levels. Move back above it and traders start to look toward the high for the day at 1.01748, the 1.01906 level, and the 38.2% retracement, and the 38.2% retracement 1.02047.
