Forex technical analysis: EURUSD reacts to the upside after lower PPI
Stays in the range
In the end of day report yesterday, I outlined the 200 week MA at 1.1776 as a key upside resistance area. The day's high stalled at 1.1770. At the high, the price was also testing a downward sloping trend line on the hourly chart (see red circle 3). Traders leaned (low risk) and the price moved lower.
On the downside, I outlined the 1.1711 level (old swing high going back to August 2015) as a level to get and stay below. The price low reached 1.1703 in the London morning session - below the 1.1711 level but right at the 38.2% retracement of the move up from the July 13 low). Traders leaned (low risk) at support and the price moved back higher.
The worse than expecting PPI data sent the dollar lower (the EURUSD higher) but we are seeing a move back lower and higher off the data. The high reached 1.17475. There is a topside trend line at 1.1752 on the hourly chart. That is the closest target to get above for trading now. Traders looking to sell can lean against it too.
The move lower came after the data, came down to 1.1725. The low stalled at the 100 bar MA on the 5- minute chart (see blue line in the chart below).
So the pair has traders battling it out between 1.1752 above and the 100 bar MA on the intraday chart below (at 1.1725).
Above the closest high level at 1.1752 is the 100 hour MA at 1.17715 and the 1.1776 level (200 week MA).
Below the closest low level at 1.1725, the 1.1711 and 1.1703 (38.2% retracement) are the extended targets.
Traders can trade the ranges. If you have a bias, wait for your extreme with limited risk against the levels. At some point, there will be a break and run but for the time being the market is stuck in the range.