EUR/USD Mid-Session Technical Analysis for January 31, 2017

The EUR/USD is trading slightly higher at the mid-session. The market is also inside yesterday’s range, suggesting investor indecision and impending volatility. Yesterday, the Euro posted a wide range in reaction to a volatile U.S. Dollar and a sharply lower U.S. equity markets.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to down on Monday. A trade through 1.0775 will signal a resumption of the uptrend.

The main retracement zone is 1.0606 to 1.0668. The market successfully tested this zone on Monday. The close above the zone gives the EUR/USD an upside bias.

The short-term range is 1.0775 to 1.0619. Its 50% level or pivot is 1.0697. This price will likely control the direction of the market today.

The intermediate range is 1.0339 to 1.0775. Its retracement zone at 1.0557 to 1.0506 is the primary downside target. A test of this zone will fulfill the objective of the January 24 closing price reversal top. Since the main trend is up, expect to see a technical bounce on the first test of this zone.

Forecast

Based on the current price at 1.0707, the direction of the EUR/USD is likely to be determined by trader reaction to the pivot at 1.0697.

A sustained move over 1.0697 will signal the presence of buyers. This could create enough upside momentum to challenge a pair of downtrending angles at 1.0725 and 1.0750. The latter is the last potential resistance angle before the 1.0775 top.

There’s an uptrending angle at 1.0739. A sustained move over this angle will also indicate the buying is getting stronger.

A sustained move under 1.0697 will indicate the presence of sellers. This could trigger a break into the main Fib level at 1.0668. This is also the trigger point for an acceleration into yesterday’s low at 1.0619 and the main 50% level at 1.0606.

Watch the price action and read the order flow at 1.0697 all session. Trader reaction to this price level will tell us if the buyers have returned or if sellers are taking control.