News that Italian lawmakers will move swiftly to implement austerity measures and economic reforms is helping to turn the December Euro higher this morning. That’s the headline story, but technicians believe it is most likely short-covering because of oversold conditions that triggered the upside rebound. Another way to spin it is that short traders decided not to press the market lower anymore.
Daily December Euro Pattern, Price & Time Analysis
Delaying the vote on austerity measures and economic reforms means that further debate is likely. This should produce more uncertainty when the market opens early Sunday/Monday and uncertainty is likely to keep the downside pressure on the Euro. Growing concerns about the possibility of the need for a bailout of Italy is the bearish factor hanging over the market at this time. Traders want a fast solution because they’ve seen what a lingering problem can do based on what has transpired in Greece.
Technically the nearest support is an uptrending Gann angle at 1.3412. Based on the short-term range of 1.3142 to 1.4241, its Fibonacci retracement level at 1.3562 was the main downside target. This price was penetrated then regained early this morning, sending shorts scurrying and setting up a potential closing price reversal bottom. This reversal is not likely to indicate a major bottom is forming, but is likely to trigger only a 50% retracement of the weekly range to 1.3671.
