Following a strong rally on Monday, but a failed breakout through the last swing top at 1.3689, the EUR USD is trading lower. Whatever the reason – uncertainty, nervousness or short-term overbought conditions, this currency pair seems poised for a pull-back of the short-term range of 1.3145 to 1.3698. This means a potential correction into the retracement zone at 1.3422 to 1.3356.
EUR USD Swing Chart and Gann Angle Analysis
The first sign of weakness will be a break through the steep uptrending Gann angle from the 1.3145 bottom at 1.3545 on Tuesday. A failure to hold this angle is likely to trigger further downside pressure to 1.3345.
On the upside what this market needs is buying with conviction rather than short-covering. Given the prolonged move down in terms of price and time, traders are not likely to buy strength, but will wait for a pull-back into a retracement zone/Gann angle support cluster between the 50%/61.8% retracement levels.
Based on the main range of 1.4549 to 1.3145, a new retracement zone has been created at 1.3847 to 1.4013. Should the short-covering continue through the last swing top at 1.3689 then look for an eventual test of this retracement zone. In addition, downtrending Gann angle resistance comes in at 1.3929 on Tuesday.
With the Gann angle from 1.4549 dropping .002 per day, the short-term forecast calls for a test of this Gann angle/50% resistance cluster on October 13 & 14.
