EUR/USD Mid-Session Technical Analysis for August 26, 2016

The EUR/USD is trading slightly higher shortly before Fed Chair Janet Yellen’s speech at 1400 GMT. Traders will be watching for clues as to the timing of the next Fed rate hike. Most traders agree that there will be a volatile reaction, leading to a possible two-sided trade during her speech.

Technically, the main trend is down according to the daily swing chart. A trade through 1.1426 will change the main trend to up. A pair of minor tops come in at 1.1355 and 1.1366. The nearest minor bottom is 1.1245.

The main range is 1.1426 to 1.0910. Its 50% level or pivot at 1.1168 is the primary downside target.

The short-term range is 1.0951 to 1.1366. Its retracement zone at 1.1159 to 1.1116 is another downside target.

The best target is the price cluster formed by the 50% levels at 1.1168 to 1.1159. We could see a technical bounce on a test of this zone.

Based on the current price at 1.1291, the direction of the market is likely to be determined by trader reaction to the long-term downtrending angle at 1.1314.

A sustained move over 1.1314 will indicate the presence of buyers. This could create enough upside momentum to challenge the minor tops at 1.1355 and 1.1366 and the long-term downtrending angle at 1.1370. The latter is the last potential resistance angle before the 1.1426 main top.

A sustained move under 1.1314 will signal the presence of sellers. This could create enough downside momentum to challenge this week’s low at 1.1245. This is the trigger point for an acceleration to the downside with the next target angle at 1.1191. This is followed by 1.1168 to 1.1159.

Watch the price action and read the order flow at 1.1314 today. Trader reaction to this angle will tell us if the bulls or the bears are in control.