EUR/USD Mid-Session Technical Analysis for May 22, 2018

The EUR/USD is trading sharply higher on Tuesday after confirming yesterday’s closing price reversal bottom. Short-covering and position-squaring ahead of the release of Euro Zone “flash” PMI data for May and the U.S. Federal Reserve meeting minutes on Wednesday may be the catalyst behind the rally.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.17165 will signal a resumption of the downtrend.

The short-term range is 1.1997 to 1.17165. Its retracement zone at 1.1857 to 1.1890 is the primary upside target. Since the main trend is down, sellers are likely to show up on a test of this area.

Daily Swing Chart Technical Forecast

Based on the early trade and upside momentum, the tone of the EUR/USD is likely to be determined by trader reaction to yesterday’s high at 1.17185.

The early breakout through 1.17185 confirmed yesterday’s closing price reversal bottom so holding above it will signal the presence of buyers. If this creates enough upside momentum then look for a minimum test of the 50% target at 1.1857.

The inability to hold above 1.17185 will signal the presence of sellers. This could drive the EUR/USD back into the potential support cluster at 1.17165 to 1.1712.

If 1.1712 fails then look for the start of a possible break into the next major downside target at 1.1553.