Forex Technical Trading: EURUSD back down to a break level at the 200 hour MA

Author: Greg Michalowski | Category: News

The EURUSD is back down testing the 200 hour MA at the 1.23814 level. On the move to the upside earlier today, the price broke above this MA levels and another leg in the short squeeze was on.  The high for the day, stalled near topside trend line resistance and near the high from the ECB Draghi day.  The 200 hour MA is where buyers should show up. What was resistance becomes support. PS stocks have recovered somewhat “helping the dollar recover”….

EURUSD is back testing the 200 hour MA. Key level for rest of the trading day.

EURUSD is back testing the 200 hour MA. Key level for rest of the trading day.

Do I love the long side in the EURUSD?  No.

Do I respect the buying that has occurred today ? Yes. The price got back above an area I thought should not be broken again at the 1.2357-59. It was. I was wrong about that line in the sand.  .

Do I respect the 200 hour MA as a support level now?  Yes.  I always feel that it is watched by the market and can give clues for traders bias from a technical perspective. Risk can be defined and limited against it..

Would I rather be short?  Yes.  Why?  If Greece is a reason for the EURUSD to rally, I don’t buy it. Why should that be so great.   If falling stocks are a reason to buy the EUR over the USD,  I don’t buy it.  Their stocks are falling too. TLTRO is in a few days.  If banks don’t come in for free money, like the last failed try, then they have no one to lend to.  That is not great news.  On the US side, 321K new jobs is 321 K new jobs.   So fundamental bias to me, is not EUR bullish.

What is on the buying side.  Technicals, and they win because, price action is a reflection of the market.  The price moved back above the 100 hour MA. The price moved back above the 1.2357-59 area. The price moved back above the 200 hour MA. The EURUSD is “oversold” (not one of my tools I like to use, but I will add it to the reasons for buying…).

Anyway, I would rather be short, then long.  A move back below the 200 hour MA would help confirm “the market” is back with me, but so far, it is acting as support .A move below the 1.2357 would be even more confirmation as would a move below the 100 hour MA (blue line in the chart above).

Will it happen?  I don’t know. I cannot move it there, but I can imagine that shorts (or those wondering whether to short) would want to see it move below that level soon vs. having to live through another short covering squeeze because the support against the 200 hour MA held. So key time for the EURUSD. Who will win depends on who wants to take more control. The buyers who have had a pretty good day, or the sellers who are looking for the pendulum to swing back in their direction. .