Based on the early price action, the direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1232.
The Euro is trading higher Wednesday. The price action suggests investors are still responding positively to yesterday’s rally that was fueled by stronger-than-expected Euro Zone growth data. Short-covering and position-squaring ahead of the Federal Reserve’s interest rate and monetary policy decisions at 1800 GMT could also be behind the rally.
At 09:14 GMT, the EUR/USD is trading 1.1233, up 0.0017 or +0.15%.
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom at 1.1112 on April 26.
The main range is 1.1324 to 1.1112. Its retracement zone at 1.1218 to 1.1243 is the primary upside target. This zone is currently being tested. Trader reaction to this zone will determine the near-term direction of the EUR/USD.
A long-term Fibonacci level at 1.1185 is support.
Based on the early price action, the direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1232.
A sustained move over 1.1232 will indicate the presence of buyers. The next target is the Fibonacci level at 1.1243. Overtaking this level could drive the EUR/USD into a downtrending Gann angle at 1.1259. This is a possible trigger point for an acceleration into the next downtrending Gann angle at 1.1292.
A sustained move under 1.1232 will signal the presence of sellers. This could trigger a break into the 50% level at 1.1218. If this level fails then look for the selling to possibly extend into the major Fibonacci level at 1.1185.
Basically, look for a strong upside bias to develop on a sustained move over 1.1243, and for a downside bias to develop on a sustained move under 1.1218.
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.