The EURUSD and GBPUSD both moved sharply higher yesterday and each of them are moving sharply lower in trading today. The S&P PMI flash data was better than expected and that is helping the bias (higher USD). Yields are also marginally higher with the 10 year yield up 3.6 basis points.
Technically, the EURUSD has reached down to tested 50% midpoint of the move up from last week’s low at 1.0594 and its 100-hour moving average just below that level at 1.0591.
For the GBPUSD, it has moved down to test its 100-hour moving average of 1.2168 and its 200-hour moving average 1.2177.
There is a stall against those support levels.
Will the buyers come in after the sharp up-and-down price action at the support targets? Arguing for that to happen is that risk can be defined and limited against the technical levels. If the price were to break below traders can simply get out.
Of concern, however, is that the pairs are trending. The EURUSD range is 104 pips currently. That is well above the 76 averages seen over the last month of trading. Trending. For the GBPUSD, the range is 123 pips, above the 95 PIP average over the last 22 trading days.
Trending markets tend to go further than traders think. So if there is a break, I tend to not mess around with it.
This article was written by Greg Michalowski at www.forexlive.com. Source