EUR/USD Mid-Session Technical Analysis for July 27, 2016
The EUR/USD is trading slightly better at the mid-session. Short-covering and position-squaring ahead of the Fed’s monetary policy statement are likely supporting the price action.
The main trend is down according to the daily swing chart. However, momentum may be shifting to the upside, supported by Monday’s closing price reversal bottom at 1.0951. There was a confirmation of the chart pattern on Tuesday, but the buying dried up and the Euro settled into a short-term range.
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A trade through 1.1030 will turn the minor trend to up. A move through 1.0951 will negate the reversal bottom and signal a resumption of the downtrend. This could lead to a test of the 1.0910 main bottom.
The short-term range is 1.0951 to 1.1030. Its 50% level or pivot is 1.0991. Based on the current price action, it looks as if trader reaction to this level will determine the direction of the market today.
A sustained move over 1.0991 will indicate the presence of buyers. This may be a bullish indicator. However, the rally may be labored because of a series of potential resistance levels at 1.1015 and 1.1025.
Taking out the minor top at 1.1030 could excite the buyers, leading to an acceleration into 1.1048, 1.1068 and 1.1096.
A sustained move under 1.0991 will signal the presence of sellers. The key support is an angle cluster at 1.0968 to 1.0966. This is followed by the reversal bottom at 1.0951 and the post-Brexit bottom at 1.0910.
The bottom at 1.0910 is the trigger point for a steep sell-off with 1.0821 the next likely target.
Look for an upside bias to develop on a sustained move over 1.0991, but don’t expect too much of a move because of the layers of resistance. The Fed will have to be extremely dovish in order for the Euro to take out these levels.
A downside bias is likely to develop on a sustained move under 1.0991. This side of the chart shows very little major support so the way of least resistance is down. If the Fed is hawkish, there is plenty of room to the downside for a steep sell-off.