EUR/USD Forex Technical Analysis – Trade Through 1.1422 Confirms Friday’s Reversal, Shifts Momentum to Up

Based on Friday’s price action and the close at 1.1403, the direction of the EUR/USD early Monday is likely to be determined by trader reaction to Friday’s high at 1.1422.
James Hyerczyk
EurDollar Notes

The Euro closed higher against the U.S. Dollar on Friday, reversing early session weakness to post a potentially bullish closing price reversal bottom. Technical buyers came in to stop the price slide as the market approached its August 15 bottom. Fundamentally, the rebound rally was fueled by a report showing weak inflation. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index excluding food and energy, missed expectations after it increased 1.6 percent in the third quarter.

On Friday, the EUR/USD settled at 1.1403, up 0.0029 or +0.25%.

The core PCE price index rose at a 2.1 percent pace in the April-June period. Weak inflation data may cause the Fed to pause the pace of its planned interest rate hikes, which would make the U.S. Dollar a less-desirable asset.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, Friday’s closing price reversal bottom may be signaling a potential shift in momentum to up. This move won’t change the trend, but it could fuel the start of a 2-3 day counter-trend rally.

A trade through 1.1335 will negate the closing price reversal bottom and signal a resumption of the downtrend. This could lead to an eventual test of the 1.1301 main bottom.

The main trend will change to up on a trade through 1.1555, followed by the next swing top at 1.1622.

The short-term range is 1.1555 to 1.1335. Its retracement zone at 1.1445 to 1.1471 is the first upside target zone.

The main range is 1.1301 to 1.1816. Its retracement zone at 1.1498 to 1.1559 is the next retracement zone target.

Daily EURUSD (Close-Up)

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at 1.1403, the direction of the EUR/USD early Monday is likely to be determined by trader reaction to Friday’s high at 1.1422.

Bullish Scenario

A trade through 1.1422 will confirm the closing price reversal bottom. This could trigger a counter-trend rally into a series of retracement levels at 1.1445, 1.1471 and 1.1498.

Bearish Scenario

The inability to overtake 1.1422 and confirm the reversal bottom will signal the presence of sellers. This could trigger a quick break into a minor pivot at 1.1379, followed by the reversal bottom at 1.1335 and the August 15 bottom at 1.1301.

Technical Catalyst

The technical catalyst that will drive the price action today will be the confirmation of Friday’s closing price reversal bottom. Taking out and sustaining a move over 1.1422 will indicate counter-trend buyers have shifted momentum to the upside. A failure at 1.1422 will indicate that sellers are still in control.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.