EUR/USD Forex Technical Analysis – Could See 2 to 3 Session Rally into 1.1083 to 1.1104The confirmation of the closing price reversal bottom is potentially bullish. Typically, this chart pattern leads to a 2 to 3 day counter-trend rally. Its first upside target is usually 50% to 61.8% of the last leg down. This makes 1.1083 to 1.1104, our first objective.
The Euro closed higher against the U.S. Dollar on Friday as renewed optimism over a near-term trade deal between the United States and China bolstered the trade-linked single-currency.
Those hopes were generated by upbeat comments from White House economic advisor Larry Kudlow, who said on Thursday a deal was “getting close,” and by U.S. Commerce Secretary Wilbur Ross who told the Fox Business Network on Friday that there was a very high probability the United States would reach a final agreement on a phase one trade deal with China.
On Friday, the EUR/USD settled at 1.1052, up 0.0031 or +0.28%.
Despite the price surge, some traders remained cautious over the two economic powerhouses reaching a trade deal at this time. This may have helped limit the Euro’s gains. Analysts at Commerzbank said the comments from the high-ranking U.S. officials could not be taken seriously until the trade documents could be assessed and a deal signed.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum shifted to the upside with the formation of the closing price reversal bottom and the subsequent confirmation of the chart pattern on Friday.
A trade through 1.0989 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend officially changes to up on a move through 1.1176.
The main range is 1.0879 to 1.1179. Its retracement zone at 1.1029 to 1.0994 is support. It essentially stopped the selling on November 14.
The new short-term range is 1.1176 to 1.0989. Its retracement zone at 1.1083 to 1.1104 is the first upside target. Since the main trend is down, sellers are likely to come in on the first test of this zone.
The confirmation of the closing price reversal bottom is potentially bullish. Typically, this chart pattern leads to a 2 to 3 day counter-trend rally. Its first upside target is usually 50% to 61.8% of the last leg down. This makes 1.1083 to 1.1104, our first objective.