European Central Bank, Frankfurt

EUR/USD Mid-Session Technical Analysis for October 25, 2016

The EUR/USD is trading slightly higher at the mid-session. For a second consecutive day, the Forex pair is posting an inside move after reaching a multi-month low at 1.0859 on October 21. This indicates trader indecision and impending volatility. It could also be indicating the market is going through a transition from bearish to bullish, due to extremely oversold trading conditions.

Furthermore, it may not be the Euro that is strengthening but the U.S. Dollar that is weakening.

Technical Analysis

The main trend is down according to the daily swing chart. The market is in no danger of turning the main trend to up, but it is in the window of time for a potentially bullish closing price reversal bottom. If we do take out 1.0859 then close higher, then this would indicate the buying is greater than the selling at current price levels.

A trade through 1.0859 will signal a resumption of the downtrend with the March 10 bottom at 1.0821 the next likely downside target.

On the upside, the first target is the June 24 (Brexit Bottom) at 1.0910. This is a potential trigger point for an extension into the short-term retracement zone at 1.0949 to 1.0970.



Based on the current price at 1.0886 (1003 GMT) and the early price action, the direction of the market today is being controlled by the downtrending angle at 1.0859.

A sustained move over 1.0859 will indicate the presence of buyers with the first target 1.0910.

Crossing to the weak side of the angle at 1.0859 will signal the presence of sellers. This could create enough downside momentum to challenge the longer-term uptrending angle at 1.0824, followed by 1.0821.

If the U.S. Dollar breaks and/or Treasury yields weaken, the Euro is likely to pick up further support.

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.