The Euro is trading higher at the mid-session on Monday but off its high as surging coronavirus cases undermined bullish sentiment that had kicked off the year. The pressure came from a firming U.S. Dollar, which rose from its low after U.S. stocks turned lower after opening at record levels.
Although the single currency came out of the box with a strong upside bias on Monday, the rally wasn’t strong enough to take out last week’s high at 1.2310, which may have encouraged some bullish traders to lighten up on the long-side.
At 16:13 GMT, the EUR/USD is trading 1.2273, up 0.0025 or +0.21%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. We’re not going to count the January 1 crash to 1.2025 because we’re sure it was an aberration and may even be lifted off the charts.
A move through 1.2310 will signal a resumption of the uptrend. A trade through the December 9 bottom at 1.2059 will change the main trend to down.
The minor trend is also up. A trade through the December 21 minor bottom at 1.2130 will change the minor trend to down.
Daily Swing Chart Technical Forecast
Trader reaction to 1.2310 will set the tone in the market into the close on Monday.
A sustained move under 1.2310 will indicate the absence of buyers and the presence of sellers. If this move creates enough downside momentum then look for a possible test of the minor bottom at 1.2130 later this week.
Overtaking and sustaining a rally over 1.2310 will signal the presence of buyers. If this move creates enough upside momentum then look for an eventual test of the April 17, 2018 main top at 1.2413.
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.