European Central Bank, Frankfurt

EUR/USD Mid-Session Technical Analysis for October 31, 2016

The EUR/USD is trading lower at the mid-session. The market is showing no reaction to the FBI’s probe of Democratic candidate Hillary Clinton’s emails, which suggests the issue may be a non-event. All I can say is the story is out there and it can develop into anything the news services want it to be so be prepared for breaking news throughout the day – good or bad.

If the news is bad and traders react like they did on Friday then look for stocks to break and for traders to move their money into the safety of gold, the Japanese Yen and the Euro. Today’s price action suggests there is good news somewhere.

There are a few U.S. reports today which could trigger a reaction by traders, however, the price action could be limited because of the Fed’s interest rate announcement on Wednesday. It is widely expected to leave rates unchanged and offer guidance as to the timing of the next Fed rate hike.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside for three days since the Euro reached a bottom at 1.0850 on October 25.

The main range is 1.1279 to 1.0850. Its retracement zone at 1.1064 to 1.1115 is the primary upside target.

The intermediate range is 1.1039 to 1.0850. Its retracement zone is 1.0944 to 1.0967. This zone is currently being tested.

The short-term range is 1.0850 to 1.0991. Its retracement zone at 1.0921 to 1.0904 is the primary downside target. This zone is important because aggressive counter-trend buyers are going to try to form a potentially bullish secondary higher bottom. Bearish traders are going to try to take out this zone.

daily-eurusd
Daily EUR/USD

Forecast

Based on the current price at 1.0954, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the intermediate 50% level at 1.0944.

A sustained move under 1.0944 will indicate the presence of sellers. This could create a labored move into 1.0930, 1.0921, 1.0904 and 1.0890.

Holding above 1.0944 will signal the presence of buyers. This could drive the market into the intermediate Fibonacci level at 1.0967. This is followed by Friday’s high at 1.0991. Taking out this high could create enough upside momentum to challenge the long-term downtrending angle at 1.1029.

Watch the price action and read the order flow at 1.0944 today. Trader reaction to this level will tell us if the bulls are taking control, or if the sellers are still in control.

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.