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James Hyerczyk
EUR/USD

The Euro is trading higher for a second session following Tuesday’s closing price reversal bottom. The Euro didn’t all of a sudden turn bullish, but the U.S. Dollar did get weaker after yesterday’s ISM US Manufacturing PMI report showed a contraction for the first time in three years. This report raised fears over a possible U.S. recession, which means the Fed will have to get more aggressive with its stimulus, and this is pressuring demand for the greenback.

At 13:04 GMT, the EUR/USD is trading 1.1016, up 0.0040 or +0.37%.

Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum turned higher with the formation of the closing price reversal bottom at 1.0926 on September 3 and the subsequent confirmation earlier today.

The main trend will actually change to up on a move through 1.1164. This is highly unlikely, but there is room for a normal 50% to 61.8% correction. A trade through 1.0926 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The short-term range is 1.1164 to 1.0926. Its retracement zone at 1.1045 to 1.1073 is the primary upside target. Since the main trend is down, sellers could come in on the first test of this area.

Additional resistance is the former main bottom at 1.1027.

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Daily Technical Forecast

Based on the early price action and the current price at 1.1016, the direction of the EUR/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 1.1024.

Bearish Scenario

A sustained move under 1.1024 will indicate the presence of sellers. This could trigger a break into the uptrending Gann angle at 1.0966. If this fails then look for a test of the next uptrending angle at 1.0946. This is the last potential support angle before the 1.0926 main bottom.

Bullish Scenario

A sustained move over 1.1024 will signal the presence of buyers. Overcoming 1.1027 will indicate the buying is getting stronger. This could trigger a further rally into 1.1045 to 1.1073. Watch for sellers to come in on the first test of this area.

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