50% Level at 1.1125 is Controlling the EUR/USD

The EUR/USD closed sharply lower last week, reaffirming the downtrend. The Forex pair also closed on the weak side of the major 50% level. This was further indication of a weakening market.

The main trend is down according to the weekly swing chart. The next target is a main bottom at 1.0821. A trade through 1.1426 will turn the main trend to up.

The main range is 1.1712 to 1.0539. Its 50% level or pivot is 1.1125. This is a major price level. Trader reaction to this pivot could should determine the longer-term trend of the Euro. So watch the price action and read the order flow all week at this price level. We could see a choppy, two-sided trade on both sides of this pivot until the bulls or the bears decide to take control.

Since last week’s close was below the pivot at 1.1125 and the long-term uptrending angle at 1.1139, we are likely to start this week with an early downside bias.

A sustained move under 1.1125 will indicate the presence of sellers. Crossing to the weak side of the steep downtrending angle at 1.0976 will indicate the selling is getting stronger.

The weekly chart begins to open up to the downside under 1.0976 with the next major targets an uptrending angle at 1.0839 and the main bottom at 1.0821.

A sustained move over 1.1125 will signal the presence of buyers. However, overtaking the uptrending angle at 1.1139 will indicate the buying is getting stronger. This could create enough upside momentum to trigger a strong rally into the nearest downtrending angle at 1.1296.

Watch the price action and read the order flow at 1.1125 all week. This is the major price level controlling the direction of the Euro. Since it is a horizontal line, it is going to be important over the long-run as long as the Euro stays in the 1.1712 to 1.0539 range.