Trader thoughts - Levels to fade EURUSD
In US trade, EURUSD moved to whisker from parity and found supply into the big figure – its hard to pinpoint an exact reason, but without being on an investment bank flow desk, we can believe this has been driven by a reduction in USD longs as equity markets rage higher – we also know US real rates have cratered in the past two days and terminal interest rates pricing in the US has priced out a 25bp hike.
EUR shorts in the broader market have capitulated as we moved towards parity, and one suspects we’ve found a much cleaner structure – Much falls on moves in equity markets and whether there can be a further easing of financial conditions.
The levels to watch – intraday - are the 50-day MA and the top of the channel seen between 1.0016 and 1.0068. The 50-day MA has been an excellent trend filter all year, but we can also see that when price moved down to 0.9500 it was 4.6% away from this MT average – this is over 2 standard deviations from the average seen since 2000, and rarely does it extend past these statistical measures without some sort of price consolidation. We’re seeing that play out now, but the question is whether this is the level to reapply shorts. I think we can push a little higher but would be leaving limit sell orders for a day trade above the 50-day MA.
EUR shorts in the broader market have capitulated as we moved towards parity, and one suspects we’ve found a much cleaner structure – Much falls on moves in equity markets and whether there can be a further easing of financial conditions.
The levels to watch – intraday - are the 50-day MA and the top of the channel seen between 1.0016 and 1.0068. The 50-day MA has been an excellent trend filter all year, but we can also see that when price moved down to 0.9500 it was 4.6% away from this MT average – this is over 2 standard deviations from the average seen since 2000, and rarely does it extend past these statistical measures without some sort of price consolidation. We’re seeing that play out now, but the question is whether this is the level to reapply shorts. I think we can push a little higher but would be leaving limit sell orders for a day trade above the 50-day MA.
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