EUR/USD Forex Technical Analysis – Next Major Downside Target is 1.0838

The Euro is trading sharply lower late Friday after taking out its August bottom. The size of the break comes as no surprise since the daily, weekly and monthly charts all showed there was plenty of room to the downside under this level. Take that 1-hour and 4-hour chart-watchers. I’ll bet you didn’t that one coming.

The strong U.S. economy is partly to blame for the Euro’s weakness, but most of the selling is being fueled by short-sellers who are looking for aggressive easing by the European Central Bank despite protests by some policymakers, who don’t feel the need for hardline stimulus.

At 17:50 GMT, the EUR/USD is trading 1.0969, down 0.0088 or -0.80%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The first wave of selling came in on Friday when sellers took out 1.1052 with conviction. The second wave of sellers hit the single currency hard when the August 1 bottom was violated.

The daily chart shows there is plenty of room to the downside with no major support coming in until the May 11, 2017 main bottom at 1.0838.

Daily Technical Forecast

Based on the early price action and the current price at 1.10969, the direction of the EUR/USD into the close is likely to be determined by trader reaction to a steep downtrending Gann angle at 1.1004.

Bearish Scenario

A sustained move under 1.1004 will indicate the presence of sellers. If this move continues to generate enough downside pressure then look for the selling to possibly extend into a downtrending Gann angle at 1.0890.

Crossing to the weak side of the angle at 1.0890 will put the EUR/USD in a bearish position with 1.0838 the next target.

Bullish Scenario

Overtaking the downtrending Gann angle at 1.1004 will signal the return of buyers late in the session. This will probably be caused by profit-taking ahead of the long U.S. holiday weekend and end of the month position squaring. The next potential upside target will be the old bottom at 1.1027.