EUR/USD Mid-Session Technical Analysis for October 24, 2016

The EUR/USD is called slightly higher at the mid-session. The market is also trading in an inside range which indicates investor indecision and impending volatility. Oversold conditions may be contributing to the price action after last week’s steep decline.

We could see some volatility later in the session with the scheduling of speeches by two FOMC members at 1300 GMT and 1305 GMT. William Dudley and James Bullard, both hawkish Fed members, could move the markets if they continue to build their cases for a December rate hike. If there is no movement then this would indicate that a rate hike has been priced in.

Technical Analysis

The main trend is down according to the daily swing chart. The market isn’t in a position to change the main trend to up, but we are in the window of time for a potentially bullish closing price reversal bottom. A trade through 1.1039 will turn the minor trend to up.

The short-term range is 1.1039 to 1.0859. Its retracement zone at 1.0949 to 1.0970 is the primary upside target today. Since the main trend is down, this zone is likely to act like resistance.

An additional resistance level is the old Brexit low at 1.0910. The next major downside target is the March 10 bottom at 1.0821.

Forecast

Based on the current price at 1.0887 and the earlier price action, the direction of the EUR/USD is likely to be determined by trader reaction to the downtrending angle at 1.0879.

A sustained move over 1.0879 will indicate the presence of buyers. This could generate enough upside momentum to trigger a move into 1.0910. This is the trigger point for an acceleration into the short-term retracement level at 1.0949.

A sustained move under 1.0879 will signal the presence of sellers with 1.0859 the next target. Taking out last week’s low will likely lead to the test of 1.0821.

Watch the price action and read the order flow at 1.0879 the rest of the session. Trader reaction to this angle will tell us if the selling pressure is increasing or if buyers are starting to regain control.