EUR/USD Mid-Session Technical Analysis for January 15, 2018

The EUR/USD picked up where it left off on Friday, adding further to its gains as it hit price levels not seen in three years. The catalyst behind the rally was aggressive buying by investors betting that European Central Bank policymakers could be poised to further trim their monetary stimulus.

Despite the strong speculative rally, there are some who believe the rally is overdone and that the strength of the Euro itself will delay the ECB’s normalization. One analyst from Mizuho Securities went as far to say, “The ECB is conducting verbal tightening, so they don’t need to move on interest rates.”

Daily Technical Analysis

The main trend is up according to the daily swing chart. The EUR/USD is not likely to change its trend to down, but it is in the window of time for a potentially bearish closing price reversal top. This could lead to the start of a two to three day correction.

The long-term 50% level at 1.2166 is key support. Currently, the EUR/USD is trading on the strong side of this level, giving it an upside bias. Crossing back below this level will indicate the return of sellers.

Daily Technical Forecast

Based on the current price at 1.2275 and the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the steep uptrending Gann angle at 1.2235.

A sustained move over 1.2235 will signal the presence of buyers. This will indicate that the upside momentum is strong enough to fuel a rally of at least .008 per day from the 1.1915 main bottom.

A sustained move under 1.2235 will indicate the presence of sellers. This move could trigger a break into the 50% level at 1.2166. If this level fails then look for the selling to increase with a pair of Gann angles at 1.2096 and 1.2075 the next likely downside targets.

Watch the price action and read the order flow at 1.2235 all session. Trader reaction to this angle will determine the direction of the market all session.