EUR/USD Forex Technical Analysis – 1.2330 is Trigger Point for Downside Acceleration

The Euro is trading lower at the mid-session as quarter-end and month-end flows continue to support the U.S. Dollar. The rebalancing of portfolios by fund managers is also behind the Euro’s weakness.

At 1620 GMT, the EUR/USD is trading 1.2345, down 0.0073 or -0.59%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of Tuesday’s closing price reversal top and today’s subsequent confirmation of the chart pattern.

A trade through 1.2239 will change the main trend to down. A move through 1.2476 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is 1.2555 to 1.2153. The EUR/USD straddled its retracement zone at 1.2354 to 1.2401 before moving below it in a sign of weakness.

The short-term range is 1.2239 to 1.2476. Its retracement zone at 1.2358 to 1.2330 is currently being tested. Trader reaction to this zone could determine the direction of the EUR/USD into the close. Since the main trend is up, buyers may step in to defend the trend.

Daily Swing Chart Technical Forecast

Based on the current price at 1.2345, and the intraday momentum, the direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.2358 and 1.2330.

A sustained move over 1.2358 will indicate the presence of buyers. If this creates enough upside momentum, we could see a rally back to 1.2401.

A sustained move under 1.2330 will signal the presence of sellers. The daily chart is wide open to the downside under this level so let’s call it a trigger point for an acceleration to the downside. The Euro could collapse under this level if there is a wave of strong sell orders.