The EUR/USD is trading higher at the mid-session. The catalyst behind the move is optimism over U.S. tax reform. Traders feel that the massive tax overhaul will be good for the economy and thus, the U.S. Dollar.
Daily Technical Analysis
The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the secondary higher top at 1.1940.
A trade through 1.1961 will signal a resumption of the uptrend. A trade through 1.1809 will change the main trend to down.
The EUR/USD continues to trade inside a major retracement zone, bounded by 1.1823 and 1.1886. This zone is controlling the longer-term direction of the market.
The main range is 1.1712 to 1.1961. Its retracement zone at 1.1837 to 1.1807 is providing support.
The combination of the two retracement zones makes 1.1837, 1.1823 and 1.1807 a major support cluster.
Daily Technical Forecast
Based on the current price at 1.1856 and the earlier price action, the direction of the EUR/USD will likely be determined by trader reaction to the short-term uptrending angle at 1.1849.
A sustained move over 1.1849 could give the EUR/USD a late session boost. This could drive the Forex pair into a resistance cluster at 1.1886, 1.1889 and 1.1892. Overtaking 1.1892 could trigger an acceleration to the upside with the next major target a long-term downtrending Gann angle at 1.1939. This angle stopped rallies at 1.1961 on November 27 and 1.1940 on December 1.
A sustained move under 1.1849 will indicate the return of sellers. However, the next sell-off could be labored because of numerous potential support levels at 1.1837, 1.1829, and 1.1823.
The key area that must hold is 1.1809, 1.1807 and 1.1802. We could see an acceleration to the downside if 1.1802 is taken out with rising selling volume.