EUR/USD Mid-Session Technical Analysis for December 7, 2016

The EUR/USD is trading flat at the mid-session in a lackluster trade before Thursday’s key European Central Bank meeting. The ECB is expected to announce further monetary stimulus. Traders still aren’t sure whether the size of the monthly asset purchases will be tapered or whether a formal signal on the eventual end of the asset-purchase program will be announced.

Technical Analysis

The main trend is up according to the daily swing chart. It turned up on Monday when the rebound rally from 1.0503 took out the previous main top at 1.0685. Buyers also helped form a potentially bullish closing price reversal bottom at 1.0503.

A trade through 1.0796 will confirm the closing price reversal chart pattern. A move through 1.0503 will negate the chart pattern and likely lead to a test of the March 13, 2015 main bottom at 1.0462.

The main range is 1.1299 to 1.0503. If there is a breakout over 1.0796 then look for the rally to extend into its retracement zone at 1.0901 to 1.0995.

The short-term range is 1.0503 to 1.0796. Its 50% level or pivot comes in at 1.0650. This price is essentially controlling the short-term direction of the market.

Forecast

Based on the current price at 1.0724 and the current tight range, I’m not looking for a major move today.

The nearest downside target is a steep uptrending angle at 1.0663, followed closely by the pivot at 1.0650. We could see a technical bounce on the first test of the angle, or the pivot.

If the pivot fails as support then the selling is likely to extend into uptrending Gann angles at 1.0583 and 1.0543.

If there is a surprise breakout over 1.0796 then this may generate enough upside momentum to challenge a long-term downtrending angle at 1.0899 and the main 50% level at 1.0901.