EUR/USD Mid-Session Technical Analysis for November 21, 2018
The Euro is trading higher on Wednesday, supported by reports that Italy may be open to reviewing its draft budget for 2019, potentially relaxing some of the tension with the European Union that has been weighing on the single currency.
The European Commission is scheduled to take the first step on Wednesday towards disciplining Italy over its draft fiscal plan. However, a report that Italian Deputy Minister Matteo Salvini may be open to reviewing the government’s 2019 budget helped support Italian government bond markets and the Euro.
According to the newspaper La Stampa, Salvini was ready to reduce the planned spending on a citizen’s income and the unwinding of a previous pension reform.
At 1210 GMT, the EUR/USD is trading 1.1394, up 0.0023 or +0.22%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. Yesterday’s closing price reversal top is a sign that momentum may be getting ready to shift to the downside after a six-day counter-trend rally.
A trade through 1.1359 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 correction. A move through 1.1474 will negate the closing price reversal top. A trade through 1.1501 will change the main trend to up.
The nearest retracement level resistance is a 50% level at 1.1447.
The new short-term range is 1.1216 to 1.1474. Its retracement zone at 1.1345 to 1.1315 is the first downside target. Aggressive counter-trend buyers could come in on a test of this area.
Daily Technical Forecast
Based on the current price at 1.1394, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at 1.1401.
A sustained move over 1.1401 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the resistance cluster at 1.1447 to 1.1451. Overtaking 1.1451 could trigger a further rally into another resistance cluster at 1.1474 to 1.1476. This is the last potential resistance area before the 1.1501 main top.
A sustained move under 1.1401 will signal the presence of sellers. If this move generates enough downside momentum the look of a potential drive into an uptrending Gann angle at 1.1356. Watch for a technical bounce on the first test of this angle.
If 1.1356 fails as support then look for sellers to drive the EUR/USD into the short-term retracement zone at 1.1345 to 1.1315.