Low gets to within 23 pips of 2016 low
The EURUSD has pressed lower in the first full day of forex trading for 2017.
The currency markets benchmark pair versus the USD fell to a low of 1.0374 - within 23 pips of the 2016 low price of 1.03517. This despite higher than expected CPI for Germany (click HERE). In the process the pair leaves the liquidity spike high from Friday in the dust and is trading right around the low closing level from 2016 at 1.0386.
Now... the pair has done more sideways trading over the last two hours of trading with support showing up at 1.0380. Is the pairs buyers and sellers balancing out? Perhaps. but if that is to be the case - and we are to correct more - buyers need to show that they can take back more control then what they have shown so far.
What might a bottom look like technically?
- Continue to hold the 1.03745-803 area. We are only a few pips away from each level a the moment.
- Work back above the 1.0400 level. A spike low in the London session stalled at 1.0396, rallied near trend line resistance on the 5-minute chart (see below). Get above that level and 1.0400 and shorts might be inclined to cover and longs from below feel a bit more relief.
That is the absolute minimum.
Having said that, are the buyers really taking back control so far? Not really. If they are, they are not really showing too much support and remember they had some favorable inflation data from Germany that should have been supportive.
More bearishness from the break of the hourly MAs
What sticks out from a bearish standpoint (in addition to the trend lower today) is what happened on the breaks of the 100 and 200 hour MAs today. Looking at those breaks (see overlays on the 5-minute chart below), traders took the the price below those levels and after the breaks, the price did not move back above those lines on corrections. Sellers were showing their hands by keeping the lid on rebounds. The 200 hour MA is currently at 1.0446 while the 100 hour MA is at 1.04678. If the bearishness is to be reversed, those MA, need to be rebroken.
So shorts can continue to try and milk the downside with a break of the lows pushing toward the December lows (at 1.0352 area) as the next target for the pair.
If there is to be a rebound, get above the 1.0400 level and the waters get a little more muddy at least from an intraday trading perspective, but understand it is just step one. A further move above the 38.2% of the days move lower at 1.0418 and the 100 bar MA on the 5- minute chart at 1.0424 area currently will be the next upside targets. And then there are those hourly MAs.