- Price moves into swing area above between 1.0925 and 1.09438
The EURUSD began the New York session with a decline following the better-than-expected initial jobless claims data. In this morning’s analysis, we discussed the importance of the 100-hour moving average at 1.0898, and how staying below that level was necessary to maintain a bearish bias. However, as seen in the chart above, the price failed to remain below the 100-hour moving average, and buyers returned during the last hour before the London fix, pushing the pair higher.
This recent rally reached a new high of 1.09278, approaching a critical swing area between 1.0925 and 1.09438. Buyers are attempting to gain control, but it remains to be seen whether they can maintain the upward momentum. It’s worth noting what happened the last time the price extended above the swing area.
As illustrated in the daily chart below, the swing area began to form in March 2022 and was revisited in January of this year. In early February, the price briefly broke through this area but was unable to sustain the gains. In March, the price once again tested the resistance level, breaking above it on Tuesday and Wednesday. However, like in early February, the upward momentum was short-lived.
The critical question now is whether the price action in early February will repeat itself in early April? In other words, will sellers push the price lower from the current resistance level?
Traders should be aware of the possibility that this rally could encounter selling pressure, similar to what happened in February. For sellers hoping for a repeat, a move above 1.09438 would be the risk. Move above and stop out. Stay below 1.09438 and traders will hope for a move back below the 100 hour MA to then target the 200 hour MA at 1.08709.
Time will tell of course, but patterns repeat and quick failed breaks tend to attract sellers on a retest.