EUR/USD Mid-Session Technical Analysis for July 23, 2019

Traders fishing for sell stops are driving the Euro lower on Tuesday as long investors continue to throw in the towel on growing expectations European Central Bank President Mario Draghi will signal a rate cut in September at the ECB’s policy meeting on July 25 to keep inflation expectations on track. Some speculators are even betting the central bank will be more aggressive by announcing a 10-basis point rate cut at this meeting, while signaling additional stimulus moves for September.

At 09:58 GMT, the EUR/USD is trading 1.1178, down 0.0031 or -0.28%.

Reuters is saying that economists expect the ECB to change its forward guidance to pave the way for a rate cut in September. The futures market sees a 43% probability that European policymakers will lower a key deposit rate by 10 basis points to minus 0.50% to combat risk from global trade tensions.


Daily Technical Analysis

The main trend is down. The trend turned down earlier in the session when sellers took out the last swing bottom at 1.1200. The momentum created by this move helped fuel enough downside momentum to take out the July 9 main bottom at 1.1193 and the June 18 main bottom at 1.1181.

Sellers also violated a major, long-term Fibonacci level at 1.1185, putting the EUR/USD in a bearish position. On the upside, the resistance is 1.1278 to 1.1318.

Daily Technical Forecast

Based on the early price action and the current price at 1.1178, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the Fibonacci level at 1.1185.

Bearish Scenario

A sustained move under 1.1185 will indicate the presence of sellers. A sustained move under the former bottom at 1.1181 will indicate the selling is getting stronger. This could trigger a further break into an uptrending Gann angle at 1.1161. This is the last potential support angle before the May 30 and May 23 main bottoms at 1.1116 and 1.1107 respectively.

Bullish Scenario

Retaking 1.1185 will signal the return of buyers. This could fuel a rally into a resistance cluster at 1.1213 to 1.1215. Look for sellers on the first test of this area. Overcoming 1.1215 could, however, trigger an acceleration to the upside.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.