The pair slid faster than a ice cube in a KY jelly factor on Friday.  Moving nearly 300 pips, which is even a fairly substantial amount beyond double its daily average range, which is around 135 pip/day.  For those groping for a bottom it was hard to pick than a broken nose.

This aggressive move was imminent.  Further unfolding is plausible, but we will wait for price to confirm.  In Friday’s post I commented a move below 1.4980 indicated a move to the lower part of the range if the other levels where taken out.  They were…and well, granted I did not expect it to happen in ONE DAY(!), it happened and we should have been on the right side of that move.

Now we sit just above the low of the range.  As early session trading begins the market will makes its decision – is the pair at a point where the slide is feeling more like a dry burn, or we gonna continue on to slide in unbridled lubed up fashion as we did on Friday?  I got the levels for you to know and make your decisions:

Support is at 1.4820 and also at 1.4800.  While  a move below 1.4800 does indicated a further move down, this is one of those well loved stop hunting levels – meaning the break may not be clean and may whipsaw through the level, back and forth.  Overall it is a bearish sign for the EUR though.  Minor support comes in around 1.4775, with further support at 1.4740-1.4730, 1.4690 and 1.4665.

On the upside, we have a ways to go before we have any confirmation of a reversal back higher.  The first one comes at 1.4870, but is not real meaningful.  Although if 1.4880 (buffer added)  can be moved through it does indicate a test of 1.4900.  Between 1.4900-1.4920 is a bit no mans land.  Getting above 1.4930 indicates another upside target of 1.4950-1.4960.  But be careful, again, these are not real important levels.  Further buying back above 1.4970-1.4980 will likely result in more aggressive buying higher (not necessarily today) with a target of 1.5030.  The 1.4970-80 level is more meaningful.

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Cory Mitchell, CMT
Chief Market Strategist
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