What does the price action and technicals say about the EURUSD into the new week

Technical Analysis

The high and low stalled within the “value” area for the pair

Traders can define the “value area” as the price area where most of the price action takes place.   Extremes are the area outside the value area that are rejected when the market trades in an up and down range.

Looking at the hourly chart of the EURUSD above, Since September 4th, the pair has traded mostly between 1.10847-1.10866 above and 1.0984-89 below. Last week, there was an extreme to the downside put in after the ECB decision and and extreme on Friday that took the price above the highs before rotating lower into the close (and back below the upper value area area at 1.10847-866).

This week, the high price on Monday peaked right against that high of the value area and mved lower.  On Tuesday, the price bottomed at the low of the value area.  

From there the price moved back higher but had successive lower highs on Wednesday, Thursday and Friday.  

The price action today took the price back lower and in the process, fell below the 100 and 200 hour MA and an upward sloping trend line.  BEARISH.  The move lower from there took the price back toward the low “value area” but stalled just ahead at the 61.8% of the September trading range at 1.0996.  The bounce has taken the price to the 50% retracement.  

Overall, we look to close the week with a bearish bias.

  • The highs were rejected. 
  • The price is below the 100 and 200 hour MA and trend line
  • The price is below the 50% of the September trading range.

In addition, the pair had it’s chance to go higher  (most of the price action was above the 50% level).  It could not push higher. 

Having said that, the pair still sits between the value area defined on the bottom at 1.09846-894. It will take a run below the 1.09846-894 (and stay below) to get sellers more excited.  

PS.  If you look at the daily chart, the price high from last week (and for the month) peaked at 1.1109. Recall that the swing lows from April, May and in July (until broken), stalled at 1.1100 to 1.1110. So the high for the month remains below those old swing levels. That keeps the bears in control.  

EURUSD on the daily chart


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