EUR/USD Mid-Session Update for December 10, 2012

Last week the EUR/USD formed a closing price reversal top and reached its 50% downside target within its normal 2 to 3 day time period. The main range is 1.2680 to 1.3126 with a retracement zone at 1.2893 to 1.2838. Last week’s low was 1.2876. 

After reaching its first downside target on Friday, profit-takers came into the market to help drive the Euro back towards its intra-day mid-point and well off of its low. Early in the session on Monday, the Euro traded back down into the 50% price. Selling pressure subsided and new buyers stepped in, creating a short-term range at 1.3126 to 1.2876. 

Based on this new range and today’s shift in momentum, the market appears to be set up for a retracement to 1.3001 – 1.3030. A test of this area will be key since short-sellers will either step up to try to form a secondary lower-top, or buyers will drive the market through this zone. 

This morning the market also crossed to the bullish side of a downtrending Gann angle at 1.2886. Typically, the trading action rotates to the next angle. If this is the case, the next upside target is 1.3006. Coupled with the 50% price level, makes 1.3001 to 1.3006 the next potential upside target. This could be an important resistance cluster if tested today.