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

By:
James Hyerczyk
Published: Oct 26, 2016, 09:35 UTC

The EUR/USD is trading higher at the mid-session. The single-currency started picking up strength early Tuesday after coming close to an eight-month low.

European Central Bank, Frankfurt

The EUR/USD is trading higher at the mid-session. The single-currency started picking up strength early Tuesday after coming close to an eight-month low. Oversold conditions following last week’s steep sell-off may have helped the Euro recover. A weaker U.S. Dollar may have contributed also.

There has been no change in the major fundamentals. Euro traders are anticipating additional stimulus from the European Central Bank sometime in the near future. U.S. Dollar investors are still pricing in a December rate hike by the Fed.

The price action suggests a short-covering rally is taking place due to profit-taking and position-squaring ahead of Thursday’s U.S. Durable Goods report, Friday’s Advance GDP and perhaps next week’s Fed meeting and U.S. Non-Farm Payrolls report.

Technical Analysis

The main trend is down according to the daily swing chart. Momentum shifted to the upside following Tuesday’s closing price reversal bottom. It was confirmed early Wednesday when the EUR/USD took out 1.0904. It also picked up strength when the market crossed to the bullish side of the Brexit Bottom at 1.0910.

The short-term range is 1.1039 to 1.0850. This is the primary upside target. Since the trend is down, watch for sellers to re-emerge following a test of this zone.

The one-day range is 1.0850 to 1.0932. If there is an intraday pull-back later today then its 50% level at 1.0891 becomes the primary downside target.

A trade through 1.0850 will negate the reversal bottom and could trigger a further break into a price cluster at 1.0825 to 1.0821.

daily-eurusd
Daily EUR/USD

Forecast

Based on the current price at 1.0921 and the earlier price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the Brexit Bottom at 1.0910. This price may act like an intraday pivot.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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