The 1.0500 support holds the line
The EURUSD has been taking out levels on a fairly steady basis. This week alone we had:
- An option barrier at 1.0725.
- Then the 1.0660-75 area which was a series of floor and ceiling prices from Jan to April of 2003
- Then the 1.0560 level which was the spike low from April 2003 that tested the 100 day MA at the time (see daily chart from 2003 below)
At each test, the market had a cause for pause, but corrections were modest and the levels were broken.
Today the next target was tested at the 1.0499 level (let's call it 1.0500). This level corresponds with the low price going back to March 2003 at 1.0499, and another low going back to January 15, 2003 at 1.0503. This time, instead of bouncing modestly, the correction has been more significant. The EURUSD has moved about 145 pips to the upside. In the process, the price has been able to get back above the:
- 100 and 200 bar moving averages (blue and green lines on the chart below), on the 5 minute chart. It was the 1st time since March 9 that the price has traded above the 200 bar moving average,
- 1.0560 level (low from April 2003)
- Trend line resistance on connecting recent highs (see chart below).
What next?
The 1.0655-60 area is the next upside target for the pair, followed by 1.0692/1.07027 (see chart below). These levels should attract trader interest or at least give cause for pause after a pretty good correction.
What today has done is remind traders that it may not always be a one way street. What I like from the action, is the technical levels continue to provide a road map for traders. So be aware.