The EUR/USD is trading higher at the mid-session. The Forex pair traded down to 1.0525 earlier in the session, taking out last week’s low but failing to draw enough sellers to drive it into last week’s low. We could see more short-covering throughout the session as investors square-up ahead of Wednesday’s key U.S. Federal Reserve interest rate decision.
The main trend is up according to the daily swing chart, however, momentum has been to the downside since the formation of the closing price reversal top at 1.0872 on December 8.
A trade through 1.0503 will turn the main trend to down. If this bottom fails then look for the selling to extend into the March 13, 2015 main bottom at 1.0462.
A move through 1.0872 will signal a resumption of the uptrend with the next target zone 1.0901 to 1.0995.
The short-term range is 1.0503 to 1.0872. Its 50% or pivot price at 1.0688 is the primary upside target today. This level is also controlling the short-term direction of the market.
Based on the current price at 1.0606 and the earlier price action, the direction of the EUR/USD the rest of the session will be determined by trader reaction to the uptrending angle at 1.0603.
A sustained move over 1.0603 will indicate the presence of buyers. This could trigger an acceleration into 1.0688, followed by 1.0703 and 1.0712. Reaching this area will require a big increase in volume, however.
A sustained move under 1.0603 will signal the presence of sellers. This could lead to a retest of the uptrending angle at 1.0553. This is followed by today’s low at 1.0525 and the main bottoms at 1.0503 and 1.0462.
Watch the price action and read the order flow at 1.0603, trader reaction to this angle will tell us if the buying is increasing or if the sellers are retaking control.