EUR/USD Mid-Session Analysis for August 5, 2013

Daily Chart

After following-through to the upside early in the session after Friday’s strong finish, the EUR/USD settled into a range. A test of the opening range also failed, pushing the market lower for the day.

The main trend is down on the daily chart. Today’s action did nothing to the trend. In fact, for much of the day, the market straddled the pivot price created by the 1.3344 to 1.3187 range at 1.3265. A close below this pivot could put pressure on the market tomorrow.

Early in the session, the market also crossed over to the bullish side of a downtrending Gann angle at 1.3250. Intraday selling pressure led to a break back through this angle. This could be the start of another lower top, setting up the market for further downside pressure.

Hourly Chart

The hourly chart indicates sideways action. Early in the session, the EUR/USD traded inside of a retracement zone created by the 1.3187 to 1.3300 range. This zone is 1.3243 to 1.3230. The early session break stopped at 1.3232, shortly above a Fibonacci level at 1.3230.

After forming a main bottom at 1.3232, a new short-term range was created between 1.3300 and 1.3232. This created a retracement zone at 1.3265 to 1.3274. This appears to be the next upside target.

The main range is 1.3344 to 1.3187. This range has created a major retracement zone at 1.3265 to 1.3284. The combination of these two retracement zones indicates 1.3265 is the key number controlling the direction of the market. Regaining this price will put the market in a strong position into the close. The failure to overtake this number will mean the selling is greater than the buying.

The key uptrending Gann angle to watch is 1.3245. Since the market is trading over this level, look for an eventual test of another downtrending Gann angle at 1.3273.

Without any news to drive the market today, the EUR/USD may continue to drift throughout the session. The key number to watch is 1.3265. This price is controlling the price action at this time.