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EUR/USD Forex Technical Analysis – Taking out 1.1301 Could Trigger Sharp Break into 1.1185

By:
James Hyerczyk
Updated: Oct 31, 2018, 21:51 UTC

Based on this week’s price action, the direction of the EUR/USD the rest of the week is likely to be determined by trader reaction to the steep downtrending Gann angle at 1.1616.

EUR/USD

Sellers continue to dominate the EUR/USD this week, putting the Forex pair in a position to challenge its August low and extend the selling pressure into a major long-term retracement level. The Forex pair is being pressured by political uncertainty in Germany, following Chancellor Angela Merkel’s decision to step down in 2021. The simmering tension between the European Union and the Italian government over budgetary issues is also seen a bearish influence.

Solid U.S. labor market data on Wednesday also weighed on the single-currency on Wednesday. This helped highlight the divergence in monetary policies between the hawkish U.S. Federal Reserve and the dovish European Central Bank (ECB).

EURUSD
Weekly EUR/USD

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through 1.1301 will reaffirm the downtrend. The EUR/USD isn’t close to turning the trend to up. However, it is in the window of time for a closing price reversal bottom. This is unlikely, however, given the bearish fundamentals this week.

The major long-term range is 1.0339 to 1.12550. The market is currently trading inside its 50% to 61.8% retracement zone at 1.1447 to 1.1185. The upper or 50% level is resistance. The lower or 61.8% level is support.

Weekly Technical Forecast

Based on this week’s price action, the direction of the EUR/USD the rest of the week is likely to be determined by trader reaction to the steep downtrending Gann angle at 1.1616.

A sustained move under 1.1616 will indicate the presence of sellers. If this generates enough downside momentum then look for sellers to go after the main bottom at 1.1301. Taking out this level will indicate the selling is getting stronger. This could trigger a further decline into the major Fibonacci level at 1.1185.

A trade through 1.1616 will shift momentum to the upside on the weekly chart. This will put the EUR/USD in a position to form a weekly closing price reversal bottom that could signal the start of a 2 to 3 week counter-trend rally.

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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