The EUR/USD is trading lower shortly ahead of the U.S. opening. On Monday, the Forex pair formed a potentially bearish closing price reversal top. This chart pattern was confirmed earlier today. This could lead to the start of a 2 to 3 correction.
Daily Technical Analysis
The main trend is up according to the daily swing chart. However, the closing price reversal top has shifted momentum to the downside.
A trade through 1.1961 will negate the chart pattern and signal a resumption of the uptrend. The main trend will change to down on a move through 1.1712.
The major retracement zone at 1.1886 to 1.1823 is support.
The short-term range is 1.1712 to 1.1961. Its retracement zone at 1.1837 to 1.1807 is the primary downside target. The major 50% level at 1.1823 falls inside this zone, making is a solid downside target and potential support cluster.
Daily Technical Forecast
Based on the current price at 1.1887 and the earlier price action, the direction of the EUR/USD today is likely to be determined by trader reaction to the major Fibonacci level at 1.1886.
A sustained move over 1.1886 will indicate the presence of buyers. This could trigger a rally into the long-term downtrending angle at 1.1950. This is followed by the closing price reversal top at 1.1961. This is a possible trigger point for an acceleration into the next long-term downtrending angle at 1.2022.
A sustained move under 1.1886 will signal the presence of sellers. This could lead to a labored break because of multiple support targets at 1.1853, 1.1837, 1.1823, 1.1812 and 1.1807. Since the main trend is up, buyers may show up on a test of any of these levels.
Taking out 1.1807 could trigger an acceleration to the downside.