The EURUSD moved sharply higher through the European and early North American sessions, but the rally ran into a familiar technical roadblock.
For the second Friday in a row, the pair broke above its 100-day moving average, only to struggle to sustain momentum. This time, buyers pushed the price into the next key target area near 1.1586, where the top of a swing area converges with the 50% retracement. The high reached 1.1585, virtually testing that level to the pip, before buyers turned to sellers.
The subsequent reversal has taken the EURUSD back below the 100-day moving average, once again putting the upside move in jeopardy.
That price action has an eerily similar feel to last Friday. The EURUSD also moved above the 100-day moving average then, but the breakout failed. That failure helped trigger the decline that ultimately took the pair to 1.1511 yesterday. Importantly, that low remained above the key swing support surrounding the 1.1500 level.
As trading winds down for the week, the 100-day moving average remains the key barometer. A close near that level effectively passes the decision to next week, with traders likely to use it as the dividing line between a more bullish and bearish technical bias.
On the topside, a move back above the 100-day MA would put 1.1586 back in focus. A sustained break above that level would strengthen the bullish bias and open the door toward the 200-day moving average at 1.1627.
Conversely, staying below the 100-day MA would keep the buyers on the defensive. The next downside targets would be the 100- and 200-hour moving averages near 1.1539, followed by 1.1524. A break below those levels would shift the focus back toward the key 1.1498–1.1506 swing area.
For now, the 100-day moving average is the battleground. Above it, buyers get another opportunity. Below it, the risk increases that Friday’s breakout becomes another failed attempt.
This article was written by Greg Michalowski at investinglive.com.
