The Euro closed higher versus the U.S. Dollar on Friday, reversing earlier weakness that threated to take out the low for the month at 1.1432. The reversal to the upside was fueled by a report from Bloomberg that British Prime Minister Theresa May is ready to drop a key Brexit demand in order to make a deal for Britain to leave the European Union (EU).
On Friday, the EUR/USD settled at 1.1515, up 0.0063 or +0.55%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum may be getting ready to shift to the upside with the formation of the closing price reversal bottom. A trade through 1.1535 will confirm the chart pattern. This could trigger the start of a 2 to 3 day counter-trend rally.
The main trend will change to up on a trade through 1.1622. A move through 1.1433 will negate the reversal bottom and signal a resumption of the downtrend with 1.1301 the next potential downside target.
The main range is 1.1301 to 1.1816. Its retracement zone is 1.1559 to 1.1498. This zone is controlling the near-term direction of the EUR/USD.
The minor range is 1.1816 to 1.1433. Its retracement zone at 1.1624 to 1.1669 is the primary upside target.
Daily Swing Chart Technical Forecast
Based on Friday’s close at 1.1515, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at 1.1498.
A sustained move over 1.1498 will indicate the presence of buyers. Taking out 1.1535 will confirm the reversal bottom. This could trigger a rally into the main 50% level at 1.1559. This level is the trigger point for a potential acceleration to the upside with the next target coming in at 1.1622 to 1.1624.
A sustained move under 1.1498 will signal the presence of sellers. If this creates enough downside momentum then look for a potential break into the pair of bottoms at 1.1433 and 1.1432.
Taking out 1.1432 could trigger the start of another steep break with the August 15 bottom at 1.1301 the next major downside target.
This article was originally posted on FX Empire