EURUSD looks toward the 61.8% retracement/old swing high area from April

The EURUSD moved away from 50% and old swing area today and to another retracement and swing area

The EURUSD was shoved lower yesterday after the FOMC decision. The run moved away from an up and down area that can find the trading range since May 14. The last few days before the break saw the 100 hour moving average stall the rallies (blue line in the chart below).  Sellers against that level, were rewarded with the decision yesterday. 

 

Sellers on the break lower after the decision, were also rewarded.  

The price decline yesterday saw the pair move below its 100 day moving average of 1.20384. That break saw the price trend further lower to test the 200 day moving average at 1.1992.  Also near that 200 day moving average was the 50% retracement of the move up from the March 31 low at 1.19846.  

Today, the price cracked below both of those levels, and another leg lower was started.  The move lower today has reached 1.19255. That low moved just into a old swing area going back to April between 1.19149 and 1.19268 (there were four separate highs over that period that created a ceiling before breaking higher -see green numbered circles in the chart above).  The 61.8% retracement of the same move higher from the March 31 low is also in that area at 1.19183. 

There is some cause for pause against the area from the swing area and the retracement perspective.

Also to consider is that the break from the range since May 14 has now taken the price lower by about 166 pips. The low to high trading range from May 14 was 173 pips.  There is some symmetry in the move from a pip perspective. Of course the time perspective was less than 24 hours vs 23 days. Trends can be fast, directional and move further than expected.  

Drilling to the five minute chart below, traders can get a perspective on the trend move along with intraday risk defining levels.  

The 100 bar moving average (blue line) was able to catch up with the price during the consolidation around the 50% and the 200 day moving average.  The price did move above the falling 100 bar moving average but momentum could not be established.  When the price fell below both the 100 bar moving average and 200 day MA and stayed below, the dip buyers turned to sellers and pushed the price down. 

That trailing 100 bar moving average is currently at 1.19566.  If the support area near the swing area and 61.8% retracement is to hold (from the hourly chart), getting and staying above the 100 bar moving average on the 5 minute chart would give the dip buyers a boost of confidence.  Of course any break above that moving average would then need to extend back above the 200 bar moving average on the same chart at 1.19754 to give the buyers even more confidence.  That would be the start of a more meaningful corrective move if it is to happen.

Conversely, staying below the 100 bar moving average at 1.19566, keeps the sellers firmly in control. Be aware.

EURUSD on the 5 mintue chart

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