EUR/USD Mid-Session Technical Analysis for April 25, 2018
The EUR/USD is trading lower shortly before the U.S. opening on Wednesday. There was no follow-through to the upside following Tuesday’s dramatic reversal which suggests the move was fueled by short-covering or position-squaring ahead of Thursday’s European Central Bank monetary policy decision.
At 908 GMT, the EUR/USD is trading 1.2205, down 0.0027 or -0.22%.
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Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom may be a sign that momentum is getting ready to change to the upside.
A trade through 1.2245 will confirm the closing price reversal bottom and signal the shift in momentum. This could fuel the start of a 2 to 3 day counter-trend rally with 1.2297 to 1.2324 the primary upside target.
A trade through 1.2181 will negate the closing price reversal bottom and signal a resumption of the downtrend. This could trigger a further break into a main bottom at 1.2153. This is a possible trigger point for an acceleration to the downside.
Additional downside targets are 50% levels at 1.2166 and 1.2136. The chart pattern opens up to the downside under 1.2136 with the next target a Fibonacci level at 1.2037.
On the upside, besides the short-term retracement zone at 1.2297 to 1.2324, a retracement zone at 1.2354 to 1.2401 is another upside target.
Daily Swing Chart Technical Forecast
Based on the early trade, the direction of the EUR/USD the rest of the session will be determined by trader reaction to 1.2245 and 1.2181. Holding inside this range will form an inside move. This chart pattern typically indicates investor indecision and impending volatility.
Taking out 1.2245 will confirm the closing price reversal bottom. If this creates enough upside momentum then look for the rally to possibly extend into 1.2297 to 1.2324.
Taking out 1.2181 will signal a resumption of the downtrend with potential targets at 1.2166, 1.2153 and 1.2136. The latter is the trigger point for a steep sell-off.