The Greek crisis is deteriorating quickly during the weekend. Extreme EUR/USD volatility is on the cards.
What levels should we watch out for? Here is a guide to the big levels for euro/dollar:
Quick background: The downturn began with the breakup of negotiations and the declaration of a referendum after markets closed on Friday. This continued with a rejection of a temporary extension of the bailout on Saturday and with a decision by the ECB not to raise the cap.
EUR/USD levels
Immediate support awaits at the lows just before the crisis erupted: 1.1130. Real support awaits at 1.1050, which was a clear cap during March and April, later switched to resistance and vice versa. The line is a clear separator of ranges, but in case of a quick deterioration, we should certainly look lower.
The low of 1.0820 seen in mid May, from where the pair began a swift recovery, is another line of importance. 1.0660, which cushioned the pair twice in April, is another important line. Below, 1.0520 was another line of support back in April, but weaker than the previous ones.
1.0460 is a critical low: it was seen in March and was the lowest level in 12 years. Yes, since 2003. A breach of this line would be an extreme move, but nothing can be ruled out on thin liquidity the specter of a Grexit.
From here on, we are at levels last seen over a decade ago. We have some support at 1.0360: this was the low point in January 2003. Further down, 1.0170 worked as resistance back in November 2012. It is close to the swing high of 1.0208 seen in July of that year.
And of course, the roundest level is EUR/USD parity. The buzzword can become reality in an extreme scenario. Even lower, some analysts are talking about future levels of 0.98 or 0.95 but time-frames vary.
On the upside, we should also look at levels. It’s important that events are moving fast and that forex trading is not a one way street.
1.1290 is immediate resistance: it capped the pair in April and supported it in June. 1.1467 is the post-crash high and a very strong level.
Beyond 1.15, we find 1..1680, that held capped a failed recovery attempt and there isn’t much between here and 1.20.
Get ready
Some brokers have already taken steps that range from general warnings to imposing trading limits. Here are updates from 7 forex brokers on the Greek crisis.
Remember that in times of high volatility, trading with high leverage can be even more dangerous. Trade safely.
Here is how all this looks on the EUR/USD chart:
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