James Hyerczyk
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The Euro is trading flat after posting a two-sided trade earlier in the session. The single currency was underpinned shortly after the opening as tensions eased over Brexit. However, the currency gave up its earlier gains after the sudden resignation of British Brexit minister Dominic Raab. The event leaves UK Prime Minister Theresa May battling for survival as well as trying to convince her Conservative Party to support the EU withdrawal agreement.

At 1147 GMT, the EUR/USD is trading 1.1307, down 0.0003 or -0.02%.

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The price action suggests traders are trying to figure out how to play the sudden turn in events.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1216 will signal a resumption of the downtrend. The main trend will change to up on a move through 1.1501.

The market is currently trading inside a long-term retracement zone at 1.1447 to 1.1185. This zone is controlling the longer-term direction of the Euro. The longer the currency trades inside this range, the more dramatic the eventual breakout.

The short-term range is 1.1501 to 1.1216. Its retracement zone at 1.1359 to 1.1392 is the primary upside target. Since the trend is down, we could see selling on the first test of this area. Overtaking it will shift momentum to the upside.


Daily Technical Forecast

With the EUR/USD trading nearly unchanged and having tested both support and resistance, it’s hard to identify a direction at that time.

On the downside, the first support angle is 1.1276. This stopped the selling earlier. If it fails, then we could see a further break into another pair of angles at 1.1441 and 1.1381. The latter is the last potential support angle before the 1.1216 main bottom.

If support is established at 1.1276 and this can create enough upside momentum then look for the rally to possibly extend into the short-term 50% level at 1.1359. This is followed by a downtrending Gann angle at 1.1381 then a Fibonacci level at 1.1392.

The trigger point for a potential breakout to the upside is the Fib level at 1.1392. Taking out this level with conviction could trigger an acceleration into the next downtrending Gann angle at 1.1441. This is followed by the major 50% level at 1.1447 and another downtrending Gann angle at 1.1471. This is the last potential resistance angle before the 1.1501 main top.

Basically, Euro traders are trying to build a support base for a rally, or taking a pause before another round of selling pressure.

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