EUR/USD Mid-Session Technical Analysis for August 6, 2019

Increased demand for risk and firmer U.S. Treasury yields are helping to pressure the Euro on Tuesday. Traders are also booking profits after a three day counter-trend surge. The catalyst behind the rally is China’s decision to support the Yuan against further weakness after the currency fell below the critical 7 Yuan to the Dollar level on Monday. This move wreaked havoc on the financial markets driving up demand for lower-yielding currencies like the Euro.

At 12:10 GMT, the EUR/USD is trading 1.1187, down 0.0016 or -0.15%.

Daily Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending higher since the formation of a closing price reversal bottom at 1.1027 on August 1.

A trade through 1.1282 will change the main trend to up. A move through 1.1027 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 1.1413 to 1.1027. Its retracement zone at 1.1220 to 1.1265 is resistance. This zone stopped the rally at 1.1250 earlier today.

The short-term range is 1.1282 to 1.1027. Its retracement zone at 1.1185 to 1.1155 is minor support.

Daily Technical Forecast

Based on the early price action and the current price at 1.1187, the direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to the Fibonacci level at 1.1185.

Bearish Scenario

A sustained move under 1.1185 will indicate the selling is getting stronger. This could trigger a break into a potential support cluster at 1.1162, 1.1155 and 1.1147. Counter-trend buyers could come in on a test of this area.

The uptrending Gann angle at 1.1147 is a potential trigger point for an acceleration to the downside. This could lead to a test of the next uptrending Gann angle at 1.1087.

Bullish Scenario

A sustained move over 1.1185 will signal the return of buyers. If this move creates enough upside momentum then look for a potential rally into a resistance cluster at 1.1220 to 1.1222. Since the main trend is down, sellers could come in on a test of this area. If it fails then look for a retest of today’s intraday high at 1.1250.

If the buying is strong enough to take out 1.1250 then look for the rally to extend into another resistance cluster at 1.1263 to 1.1265.

The trigger points for an acceleration to the upside are a pair of tops at 1.1282 and 1.1286.