The EUR/USD is trading higher at the mid-session and inside Friday’s range. This chart pattern indicates investor indecision and impending volatility.
On Friday, the Euro posted a potentially bearish closing price reversal top. However, we have not had a confirmation of this chart pattern yet. This means that buyers are still coming in to defend the uptrend.
Technical Analysis
The main trend is up according to the daily swing chart. A trade through 1.0782 will negate the closing price reversal top and signal a resumption of the uptrend. This could create enough upside momentum to challenge the February 2 main top at 1.0828.
A trade through 1.0726 will confirm the closing price reversal top. This could trigger the start of a 2 to 3 day correction. It may not lead to a change in trend, but it may just indicate that the selling is greater than the buying at current price levels.
The main range is 1.0828 to 1.0493. Its retracement zone is 1.0700 to 1.0660. Holding above this zone will help maintain the upside bias. This area could be considered support.
Forecast
Based on the current price at 1.0756 and the earlier price action, the direction of the EUR/USD is likely to be determined by trader reaction to the uptrending angle at 1.0734.
A sustained move over 1.0734 will signal the presence of buyers. Holding over the downtrending angle at 1.0748 will also indicate the buying is getting stronger. This could create enough upside momentum to challenge the closing price reversal top at 1.0782 and the downtrending angle at 1.0788. This is the last potential resistance angle before the 1.0828 main top.
A sustained move under 1.0734 will indicate the presence of sellers. This should create the downside momentum needed to take out Friday’s low at 1.0726 and confirm the closing price reversal top.
Taking out 1.0726 with high volume could trigger an acceleration to the downside with the major Fibonacci level at 1.0700 the first major target, followed by the uptrending angle at 1.0664.
Watch the price action and read the order flow at 1.0734 the rest of the session. Trader reaction to this angle will tell us if the buyers are still coming in to support the trend, or if sellers are retaking control.
