EUR/USD Approaching Major Angle that Could Change the Momentum

The EUR/USD begins the week under pressure and in a position to continue the down move. However, the market is currently testing a pair of 50% levels and nearing a key Gann support angle that stopped a previous break so we may start to see the return of buyers, or profit-taking.

The main trend is down according to the daily swing chart. The trend turned down two weeks ago when the EUR/USD crossed the last swing bottom at 1.1214.

Several ranges are contributing to the price action.

The main range is 1.1712 to 1.0539. Its retracement zone is 1.1125 to 1.1264. After testing this zone the last two weeks, the market closed below its lower, or 50% level last week, contributing to the downside bias.

The intermediate range is 1.0539 to 1.1616. Its retracement zone at 1.1078 to 1.0950 is the primary downside target.

The short-term range is 1.0821 to 1.1616. Its retracement zone is 1.1219 to 1.1125. The market is currently trading on the weak side of this zone, which is further confirmation of the selling pressure.

Two 50%: levels at 1.1125 and 1.1078 and a Fibonacci level at 1.1125 form a potential support cluster. We’ll be watching this zone this week to see if a short-term bottom develops.

Based on last week’s close at 1.1112, the direction of the market is likely to be determined by trader reaction to the 50%/Fibonacci level at 1.1125.

A sustained move under 1.1125 will signal the presence of sellers. This could drive the market into the next 50% level at 1.1078. This is followed closely by the major uptrending angle at 1.1059. This angle is very important to the structure of the market since it has provided guidance since the 1.0539 main bottom the week-ending December 4, 2015. It also stopped a break the week-ending March 11 at 1.0821.

Taking out the angle at 1.1125 will indicate a major shift in investor sentiment and could trigger an acceleration into the Fibonacci level at 1.0950.

A sustained move over 1.1125 will indicate the presence of buyers. This could create enough upside momentum to begin a short-term rally. Potential upside targets this week come in at 1.1210, 1.1264 and 1.1296.

Watch the price action and read the order flow at 1.1125 this week. Trader reaction to this level will tell us if buyers are coming in to support the market, or if the selling pressure will continue.