The EURUSD rallied strongly after the tamer CPI data, and ran up to a key resistance swing area between 1.03395 and 1.03657. The high price reached 1.0367 and backed off.
The move to the downside has now moved down to retest a key break level from this morning. That break was the high price from last week along with the 50% of the move down from June 27 high at 1.02829 to 1.0293. That area defined the topside of the “Red Box” that had confined the pair for 18 days until today’s break.
It is too early to reenter the “Red Box” isn’t it.
So far, the buyers are looking at the past to define risk and limit risk on some dip buying. Hold the area and there is hope for a continuation back to the upside.
Conversely, move below and that would put the price back in the jaws of the Red Box again. There would be disppointment for the break buyers with the likelihood that buyers turn to sellers.