The EUR/USD is trading higher at the mid-session. After finding support early in the session near a 50% level for a fourth day, buyers came in to generate
The EUR/USD is trading higher at the mid-session. After finding support early in the session near a 50% level for a fourth day, buyers came in to generate enough upside momentum to take out the 61.8% or Fibonacci level.
The catalyst behind the move is greater demand for lower-yielding assets ahead of a speech over Brexit by U.K. Prime Minister Theresa May and concerns over U.S. President-elect Trump’s protectionist policies.
Trump also weakened the dollar with his comments. In an interview with the Wall Street Journal he said, “I would talk to them (China) first, but “our companies can’t compete with them now because our currency is strong and it’s killing us.”
The main trend is up according to the daily swing chart and the rally is picking up momentum. Having cleared last week’s high at 1.0684 and two main tops at 1.0652 and 1.0670, traders may have their sights set on the December 8 top at 1.0872.
The main range is 1.0872 to 1.0339. Its retracement zone is 1.0606 to 1.0668. After consolidating inside this zone for several days, the EUR/USD crossed to the bullish side of the zone. These prices are now support.
Based on the current price at 1.0710 and the current upside momentum, the next upside target is a downtrending angle at 1.0742. We could see a technical bounce on the first test of this angle, however, it is also the trigger point for a potential breakout to the upside with 1.0807 the next target angle.
On the downside, the first target is the Fibonacci level at 1.0668. If this price fails then the market could correct back to the 50% level at 1.0606.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.