EUR/USD Forex Technical Analysis – May 8, 2018 Forecast

Support for the Euro continues to erode on the weekly chart with sellers in a position to do some serious damage should they choose to do so. It’s not just short-sellers doing the damage either. There has been a lot of long liquidation going on for several weeks, mostly driven by the divergence in monetary policy between the hawkish U.S. Federal Reserve and the dovish European Central Bank. Additionally, the U.S. and Euro Zone economies appear to be moving in opposite directions.

At 0528 GMT, the EUR/USD is trading 1.1910, down 0.0013 or -0.11%.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart, however, momentum has been trending lower since the formation of the 1.2555 main top the week-ending February 16.

The minor trend is also down which confirms the downtrend in momentum.

The EUR/USD is also trading on the weak side of a number of retracement levels as well as lower for the year.

Weekly Swing Chart Technical Forecast

Based on the current price at 1.1910, the direction of the EUR/USD the rest of the week is likely to be determined by trader reaction to the Fibonacci level at 1.1936.

A sustained move under 1.1936 will indicate the presence of sellers. If the shorting and liquidation volume is strong enough, we could see a plunge into the next main bottom target at 1.1717 over the near-term.

A sustained move over 1.1936 will signal the presence of buyers, or that the selling has slowed down. This could lead to labored rally with potential upside targets last year close at 1.2001, another Fib level at 1.2037 and a 50% level at 1.2054.

The rally could pick up steam if buyers can overcome 1.2054 later in the week. This could trigger an eventual surge into a potential resistance cluster at 1.2136 to 1.2166.