EUR/USD started the day with a volatile up and down price movement. The price has been trading above and below the 100/200 hourly moving averages indicating uncertainty from buyers and sellers. In the morning video, I talked about the uncertainty of buyers and sellers due to volatile price action. A small signal was given to buyers on the back of higher lows, and the price was above the 100/200 hourly moving averages at that time.
Watch the video here.
So what happened?
The pair moved lower early and below the 100/200 hourly moving averages, but remained above the European morning low. The price has rebounded and the recent move above the moving averages has convinced buyers to move higher.
The higher extension eventually led to the EUR/USD pair rising to test the swing zone defined by the swing highs dating back to August 23 to August 27. Last week, the same area was revisited. This area is located between 1.1181 and 1.11897.
Sellers relied on the first test of the upper level 1.11897. The price moved down slightly.
What now?
Traders are now wondering if heading into the swing zone will lead to a rotation back towards the downside or is this the trend that will break higher and eventually turn to the upside?
The good news is that traders can use the 1.11897 level as a specific risk and bias level. If you are a buyer, but tired of being pressured, you can sell with a stop loss on a break above 1.11897. The next target is 1.1200, followed by the highest level recorded yesterday. .
On the downside, sell here and hope the price moves back below the nearby support at 1.1166 and then to the 100 and 200 hourly moving averages at 1.11487 and 1.11413 respectively.
Reaching and staying below the moving averages is essential to increase the bearish bias again.
Buyers win, but can you trust the rally? Staying above 1.11897 will give buyers more confidence. . .
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