EUR/USD Mid-Session Technical Analysis for October 25, 2017

The EUR/USD is trading higher at the mid-session but inside Tuesday’s range. The price action indicates investor indecision and impending volatility. Traders are keeping their powder dry ahead of Thursday’s European Central Bank’s monetary policy decision.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Monday, but there was no follow-through to the downside. This suggests the break down under 1.1729 was fueled by sell stops rather than aggressive shorting. It seems traders were reluctant to sell weakness ahead of the ECB announcement.

A trade through 1.1724 will reaffirm the downtrend. The trend changes to up on a move through 1.1858.

The EUR/USD is currently caught inside a pair of retracement zones which explains the choppy, two-sided trade this week.

Daily Forecast

Based on the current price at 1.1781, the direction of the EUR/USD today is likely to be determined by trader reaction to the 50% level at 1.1773.

A sustained move over 1.1773 will indicate the presence of buyers. This could trigger a fast move into the short-term 50% level at 1.1791. This is the trigger point for a potential acceleration to the upside with 1.1850 the next target. However, this move is not likely to take place today unless there is volume behind it.

A sustained move under 1.1773 will signal the presence of sellers. The next target is a Fibonacci level at 1.1749, followed by this week’s low at 1.1724.

If 1.1724 is taken out with rising volume, we could see a move into 1.1695 then 1.1668.

Watch the price action and read the order flow at 1.1773 all session. I don’t expect much movement due to low volume and general cautiousness ahead of the ECB decision.