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Early in the trading session, the EUR/USD broke through a recent swing bottom at 1.2828, turning the main trend to down. There was no follow-through to the downside, however, as the market reversed course to the upside after testing a major 50% price level.
From late August to Mid-September, the Euro rallied against the U.S. Dollar from 1.2465 to 1.3172. This range created a retracement zone at 1.2818 to 1.2735. The upper level of this range became support today, triggering the intraday reversal.
Although the main trend is down on the daily chart, the strong rally and close has the market in a position to turn the trend to up once again on a rally through the new swing top at 1.2959.
Traders shouldn’t expect too much of a rally initially however, since downtrending Gann angle resistance drops in at 1.2972 and another retracement zone at 1.2987 to 1.3031. Until these resistance areas are overcome, look for a choppy, two-sided trade.