Corrects 61.8% of move up from last week's low
The EURUSD tested the 100 hour MA and the 61.8% retracement of the move up from last week's low after the better-than-expected ISM manufacturing data for January.
The 100 hour moving average comes in at 1.1033. The 61.8% retracement comes in at 1.10312. The low just reached 1.10306 and bounced higher after the ISM data. The current price trades back toward the level just before the release at 1.10455. The price also move back above its 200 hour moving average at 1.10399. That level will be eyed in the short term to see if sellers can reestablish more control on a move back below that moving average line. OR the bias shifts more to the upside after the dip buyers stepped in.
Taking a broader view, the price on Friday was able to extend above the January 24 swing high at 1.10614 as well as its 100 day moving average at 1.10662. The move above those levels stalled on Friday it and today at 1.10946. That was just ahead of the natural resistance at the 1.1100 level. A swing high from January 20 reach 1.11018. That was a upside target that could not be reached.
Today's move lower has spent the last 5 or so hours trading back below the 100 day moving average at 1.10662. The risk on sentiment with yields and stocks moving higher also helped to support dollar buying before the ISM data.
So sellers (dollar buyers) have taken back more control after last week's run higher (with the opposite risk off sentiment leading the way).
Needless to say, the coronavirus is taking a backseat in trading today, but it is hard to anticipate how the winds of change will impact the future.
As a result, defining levels technically - like the 100 day moving average above and the 200 and 100 hour moving averages below - can help to define potential trading ranges and the trading bias.
The recent move down to test the support found buyers. While the previous 4 so hours found the sellers below the 100 day MA. Make sense to use levels to help trading but understand the winds of change can be from headline to headline. It also is dependent upon the fear of the market. Right now, the fear is not so great.
