Euro (€) / US Dollar ($) (EUR/USD) Mid-Session Update for March 12, 2013

Daily Chart

The EUR/USD appears to be consolidating on the daily chart after reaching a new low for the year on March 8 at 1.2955. The current chart formation suggests the market is poised for a quick rally into a series of downtrending Gann angles at 1.3139, 1.3153 and 1.3171. Since the main trend is down, look for selling pressure on the initial test of these levels.

Overcoming these angles will be a sign of strength, but it is going to take a move through the February 28 top at 1.3161 to turn the main trend to up on the daily chart. Based on the break from 1.3711 to 1.2955, we could be looking at a retracement to 1.3333 or 1.3422.

On the downside, minor support has been established at 1.2955. The monthly chart indicates that the market may break into 1.2876 to 1.2679.

Hourly Chart

The main trend turned up on the EUR/USD hourly chart when the market crossed the last swing top at 1.3053. The key to this move was the turnaround at 1.2990 which was in effect a successful test of a previous bottom at 1.2987.

The top earlier in the session stopped on a Gann angle/Fibonacci retracement level combination. The Gann angle at 1.3069 combined with the Fib level at 1.3066 to form a decent resistance cluster. The actual top at 1.3074 was probably caused by excessive speculation. Once the rally failed and the market fell back under the resistance cluster, sellers hit it hard.

At this hour the market is testing an uptrending Gann angle at 1.3020. This angle stopped a break at 1.2987 on Monday. A failure to hold this angle puts the market in a position to test 1.2988. The market is also trading on the bearish side of a resistance zone at 1.3032 to 1.3022. This is also helping to keep downside pressure on the Euro.

Downtrending resistance from the 1.3074 top is at 1.3034 this hour. Combined with the 50% level at 1.3032, this could prove to be a strong resistance zone for the next hour.