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EUR/USD Mid-Session Technical Analysis for May 31, 2018

By:
James Hyerczyk
Published: May 31, 2018, 10:01 UTC

Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to the short-term pivot at 1.1670.

EUR/USD

The EUR/USD is trading higher at the mid-session on Thursday. The move is a continuation of yesterday’s strong rally. The catalyst behind the move is the easing of political tensions in Italy.

However, the rally is being driven by short-covering and end of the month position-squaring, not aggressive buying. This is because investors are still worried about the murky Euro Zone economy.

Better-than-expected economic data is also carrying the EUR/USD higher. The Euro Zone CPI Flash Estimate rose 1.9% versus 1.6%. Core CPI came in at 1.1% versus 1.0%.

The Italian Monthly Unemployment Rate was 11.2% versus 10.9%. Italian CPI beat the estimate with a read of 0.4% versus a 0.2% estimate.

In the U.S., reports that deal with inflation – Core PCE Price Index, Personal Spending and Personal Income – are the ones that can move the EUR/USD.

EURUSD
Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Momentum hasn’t shifted to up, but today’s price action did help form a new main bottom at 1.1510. The downtrend will resume of this price is taken out.

The minor trend is also down. Taking out 1.1830 will change the main trend to up.

The minor range is 1.1830 to 1.1510. Its 50% level or pivot is 1.1670. Trading on the strong side of this level is helping to give the EUR/USD a slight upside bias. It could become support today.

The main range is 1.1997 to 1.1510. Its retracement zone at 1.1753 to 1.1811 is the primary upside target. Since the main trend is down, sellers could come in on the first test of this zone.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD is likely to be determined by trader reaction to the short-term pivot at 1.1670.

A sustained move over 1.1670 will signal the presence of buyers. If this move generates enough upside momentum then look for the short-covering rally to extend into 1.1753 to 1.1811.

A sustained move under 1.1670 will indicate the presence of sellers. This could lead to a 50% retracement of the first leg up from 1.1510. This price is currently 1.1617.

Watch the price action and read the order flow at 1.1670 all session. Trader reaction to this level will tell us if the buying is getting stronger or if sellers are retaking control.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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