Selling subsides as European markets work toward the week close
The London fixing is ahead, then another hour or so of trading. So there is time, but we are seeing a correction in the EURUSD. The sellers remain in control, but the test of the shorts conviction will be eyed. What will shorts be looking for from the price action?
Looking at the 5 minute chart above, the pairs initial fall corrected up to a level of 1.11067. At that point, new sellers came in and sold, sold, sold. The selling took the price below the 200 day MA and the 100 bar MA on the 4-hour chart at the 1.1078 area. That is a key level.
If you put a Fibonacci on the move down from the 1.11067 high to the low, the 38.2%-50% of that move comes in at 1.10687-1.10759. With the 200 day MA and the 100 bar MA on the 4 hour chart at the 1.1078 area, that area defines where sellers should show up if they are to keep control. Conversely, it is where the buyers (who are losing today) will need to push the price above to take back control.
Control is important on big moving days. If the counter trend traders can not take back control by taking back technical levels, they are not winning. They have to prove they can do it. We are currently testing the 38.2% level at the 1.10687.
