EUR/USD Mid-Session Technical Analysis for February 20, 2017

The EUR/USD is trading slightly higher on Monday, but essentially flat amid low volume and volatility. Today is a bank holiday in the United States so I don’t expect much movement with many of the major players on the sidelines. If you’re trading then expect to see two-sided price action, but be prepared for the occasional volatility spike.

Technical Analysis

The main trend is down according to the daily swing chart. However, short-term momentum has been up since the closing price reversal bottom on February 15. A trade through 1.0679 will mean momentum is trending higher. A trade through 1.0521 will negate the closing price reversal bottom and signal a resumption of the downtrend.

On the downside, retracement zone support levels come in at 1.0606 and 1.0583.

The short-term range is 1.0828 to 1.0521, its retracement zone at 1.0675 to 1.0711 is the primary upside target. The lower, or 50% level of the range stopped the rally at 1.0679 last week. This was expected because the trend is down and retracement zones tend to attract sellers.

Forecast

Based on the current price at 1.0615, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the 50% level at 1.0606.

A sustained move over 1.0606 will indicate the presence of buyers. If there is a surge in buying volume then 1.0675 will be the next upside target.

If 1.0606 fails as support then look for a move into the price cluster at 1.0583 to 1.0581. We could see some counter-trend buying on a test of this area. However, if it fails then look for an acceleration into 1.0551.