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James Hyerczyk

The EUR/USD is down sharply at the mid-session, hitting a 10-month low in reaction to a steep selloff in Italy’s debt market.  The Euro is now down about 4 percent this month against the U.S. Dollar over rising political and economic turmoil in the Euro Zone. The Euro is now set for its biggest monthly drop in more than three years.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The reason for the steep breaks is the distance between the main bottoms.

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The EUR/USD is going down as fast as it went up last year. There were very little price swings during the 2017 rally which means they are spread wide. Sellers of the Euro have no choice but to target these bottoms.

Earlier today, the EUR/USD took out the November 7, 2017 main bottom at 1.1553. This price may act like a pivot throughout the session, but if the selling pressure increases then it could be well on its way to the next main bottom target – the July 5, 2017 main bottom at 1.1312.


Daily Swing Chart Technical Forecast

Based on 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 former bottom at 1.1553.

A sustained move under 1.1553 will indicate the presence of sellers. Taking out the intraday close at 1.1510 will indicate the selling pressure is getting stronger. This could drive the EUR/USD into 1.1312.

Overtaking and sustaining a rally over 1.1553 will signal the return of buyers. This could trigger the start of a short-covering rally with 1.1670 the first upside target, followed by 1.1753.

Volatility is high and there is room for wild swings in either direction. Rallies are likely to be short-lived and met with renewed selling pressure because the fundamentals are clearly bearish. Liquidation in the Euro is still taking place.

Watch the price action and read the order flow at 1.1553 the rest of the session. Trader reaction to this level will tell us if the sellers are increasing pressure, or if buyers have returned in an effort to slow down the price slide.

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