EUR/USD Forex Technical Analysis – Confirmation of Closing Price Reversal Bottom Sets Up Rally into 1.1364

The Euro is trading higher early Thursday after posting a potentially bullish closing price reversal bottom the previous session. The chart pattern won’t change the trend to up, but it could trigger the start of a minimum 2 to 3 day correction. Since there wasn’t a major change in the fundamentals, the move probably represents traders trying to alleviate some of the downside pressure.

At 02:33 GMT, the EUR/USD is trading 1.1333, up 0.0010 or +0.09%.

Although the single-currency inched higher on Wednesday, it remained on its back foot as investors adjusted central bank tightening odds amid rising prices pressures, with the U.S. Federal Reserve seen hiking rates as early as mid-2022.

In economic news, Euro Zone inflation surged to more than twice the European Central Bank’s target in October, the European Union’s statistics office Eurostat confirmed on Wednesday, with more than half of the jump due to a spike in energy prices.

Eurostat said inflation in the 19 countries sharing the Euro rose 0.8% month-on-month in October, for a 4.1% year-on-year surge, in line with an earlier Eurostat estimate.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside earlier today when buyers confirmed yesterday’s closing price reversal bottom.

A trade through 1.1264 will negate the closing price reversal bottom and signal a resumption of the downtrend.

A trade through 1.1464 turns the minor trend to up. Taking out 1.1608 will change the main trend to up.

The minor range is 1.1464 to 1.1264. Its 50% level or pivot at 1.1364 is the nearest upside target.

The key resistance area is a series of 50% levels at 1.1470, 1.1493 and 1.1509. The key support is a long-term Fibonacci level at 1.1291.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD early Thursday is likely to be determined by trader reaction to 1.1291.

Bullish Scenario

A sustained move over 1.1291 will indicate the presence of buyers. Taking out the intraday high at 1.1338 will indicate the buying is getting stronger. This could trigger a surge into 1.1364.

Look for sellers on the first test of 1.1364. Overcoming it could trigger an acceleration into 1.1464 – 1.1509.

Bearish Scenario

A sustained move under 1.1291 will signal the presence of sellers. The first downside target is the closing price reversal bottom at 1.1264. This is followed by a series of long-term bottoms at 1.1255, 1.1219 and 1.1168.