Euro (€) / US Dollar ($) (EUR/USD) Mid-Session Update for December 20, 2012

The EUR/USD followed through to the downside following Wednesday’s closing price reversal top. This move should’ve triggered a sharp break, but the market was able to find support on a main uptrending Gann angle at 1.3200. 

Early in the mid-session, the EUR/USD found support at 1.3188. Based on the near-term range of 1.3308 to 1.3188, a retracement zone was formed at 1.3248 to 1.3262. If the market is poised for a correction, this zone has to become new resistance. 

The closing price reversal top does not indicate a change in trend, but rather the start of a near-term correction of the last rally. The short-term range is 1.2876 to 1.3308. The retracement zone of this range at 1.0320 to 1.3041 is the next potential downside target. One can see from the chart that under the uptrending Gann angle at 1.3200, the market has plenty of room to the downside. 

At the mid-session, traders should watch to see if sellers show up on a test of 1.3248 to 1.3262. If they do, then look for the EUR/USD to begin to rollover. If upside momentum is too strong, the Euro will not hesitate in this zone. Taking out the closing price reversal top at 1.3308 negates the chart pattern and could trigger an acceleration to 1.3385.