EUR/USD Mid-Session Technical Analysis for January 28, 2019

The Euro is trading higher on Monday despite last week’s dovish comments from European Central Bank President Mario Draghi. After the ECB policy meeting, he said economic risks have moved to the downside and near-term data is likely to be weaker than previously expected.

The price action since the dovish news on January 24 suggests traders believe that growth in the Euro Zone especially in Germany and France, has been weaker-than-expected and analysts expect the ECB to remain dovish into the end of the year.

At 1044 GMT, the EUR/USD is trading 1.1414, up 0.0008 or +0.07%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 1.1289 will signal a resumption of the downtrend. This could lead to a test of the December 14 main bottom at 1.1270. This is a potential trigger point for an acceleration to the downside. The main trend will change to up on a move through 1.1570.

The minor trend is up. It turned up on Friday when buyers took out the minor top at 1.1395. This shifted momentum to the upside. It was reaffirmed earlier today when buyers took out the next minor top at 1.1413. The next minor top target is 1.1490.

The main range is 1.1570 to 1.1289. Its retracement zone at 1.1429 to 1.1463 is the first upside target zone. The major retracement zone target is 1.1516 to 1.1587. This zone stopped the rally earlier in the month at 1.1570.

Daily Technical Forecast

Based on the early price action, the direction of the EUR/USD the rest of the session on Monday is likely to be determined by trader reaction to the 50% level at 1.1429. Keep in mind that with the trend down, sellers tend to come in on tests of retracement zone. They may not necessarily be new short-sellers, but counter-trend profit-takers.

Bullish Scenario

A sustained move over 1.1429 will indicate the presence of buyers. The first target is the downtrending Gann angle at 1.1410, followed by the Fibonacci level at 1.1463. Sellers could come in on a test of any of these levels. However, the Fib level is also the trigger point for an acceleration to the upside with the next major targets coming in at 1.1490 and 1.1516.

Bearish Scenario

A sustained move under 1.1429 will signal the presence of sellers. If this move can create enough downside momentum then look for the selling to possibly extend into the nearest uptrending Gann angle at 1.1369.

Essentially, if sellers do regain control then look for a minimum 50% retracement of the first rally from 1.1289. Assuming 1.1426 is the new short-term top then look for a possible retracement back to 1.1358.