EUR/USD Mid-Session Analysis for July 3, 2013

Daily Chart

After briefly penetrating a potential support angle at 1.2961 early in the session, the market reversed back up, forming a daily closing price reversal bottom at 1.2922. This chart pattern often leads to the start of a 2 to 3 day rally, equal to at least 50% of the previous correction. Based on the short-term range of 1.3415 to 1.2922, the retracement zone at 1.3169 to 1.3227 is the next potential upside target.

Downtrending Gann angle resistance stopped today’s rally at 1.3015. Crossing over to the bullish side of this angle will be the first sign of strength, but regaining the Fibonacci level at 1.3033 will probably be necessary to attract fresh buying or at least let the weak short sellers know this developing move could be serious.

Upon further investigation, it looks as if the combination of Wednesday’s high at 1.3031 and the Fibonacci level at 1.3033 could be the key to Thursday’s session. Acting like a pivot price, this area will control the short-term direction of the market. An early session breakout through this zone on Thursday could set the tone for the day especially since the European Central Bank meets on Thursday.

Hourly Chart

The main trend turned up on the hourly chart when the EUR/USD crossed the swing top at 1.2982.

The main range is 1.3077 to 1.2922. This range has formed a retracement zone at 1.2999 to 1.3018. After spiking to 1.3032, the market has settled into this range, indicating uncertainty and balance.

The short-term range is 1.2922 to 1.3032. The retracement zone created by this range is 1.2977 to 1.2964. If momentum dies overnight then look for a pullback into this range.

From the 1.2922 bottom, uptrending Gann angle support comes in at 1.2997 this hour. This angle is moving up at a rate of .0005. At this time it is giving the market both strength and direction. Crossing over to the weak side could trigger an acceleration to the downside.

This hour and next watch the 50% level at 1.2999 and the Gann angle at 1.2997 and 1.3002. The longer the market stays range bound the greater the volatility on the breakout.