The fall yesterday did take price below its 100 hour moving average for the first time since March 7, but could not sustain momentum below that level, and closed higher.
After a brief rally in the early Asian session today, the pair rotated back to the downside, broke back below its 100 hour moving average and stay below that level. A rising trend line was also broken (the underside of the trendline currently comes in at 122.187). However, the 200 hour moving average (green line in the chart above) did stall the fall. The price has been consolidating in the European session mainly between 121.51 and 122.07.
Support remains at the 200 hour moving average currently at 121.397. The price has not traded below that moving average since March 7. On a break below the 200 hour moving average, the 38.2% retracement of the March trading range cuts across at 121.10. That is also near swing lows from Friday’s trade. A move below that retracement level opens the door for further downside momentum as the sellers win more battles. Hold above the 38.2% retracement and the correction is simply a plain-vanilla variety after the sharp trend move to the upside.
The traders who are buying against the 200 hour moving average would now want to see a move back above the London consolidation high at 122.07 togive more comfort, followed by the broken trendline at 122.187 (and moving higher). A further move above the flattening 100 hour moving average at 122.638 would be a blow to the shorts from above who took bearish action from the breaking of that moving average level earlier today.