The EUR/USD is trading slightly lower at the mid-session after posting trades on both sides of the market. Uncertainty over the U.S. fiscal cliff is
The EUR/USD is trading slightly lower at the mid-session after posting trades on both sides of the market. Uncertainty over the U.S. fiscal cliff is making investors nervous, making the market sensitive to news. With the market trading inside of a tight range bounded by 1.3308 and 1.3158, investors should watch for volatility.
The aforementioned range has created a retracement zone at 1.3233 to 1.3251. This zone is controlling the short-term direction of the market. On Thursday, a rally through it failed to garner enough buying power to drive it higher, leading to a collapse late in the trading session. Today, the market found resistance at the upper end of the zone at 1.3251.
Both uptrending and downtrending Gann angles are also influencing the market’s movement. A downtrending Gann angle from 1.3308 stopped the market on Thursday. This angle is at 1.3278 today. Another Gann angle at 1.3248 combined with the Fibonacci level at 1.3251 to form a solid resistance cluster.
An uptrending Gann angle from the 1.2876 bottom has provided both support and direction since December 7. This angle is at 1.3156. The main bottom at 1.3158 combines with this angle to form a support cluster. A break through this zone is likely to trigger sell stops and an acceleration to the downside.
Based on the main range of 1.2876 to 1.3308, a sharp sell-off is likely to lead to a test of the retracement zone at 1.3092 to 1.3041.
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.