The EUR/USD surged to the upside overnight, taking out the September 17 top at 1.3172 on its way to 1.3187. The rally reaffirmed the uptrend, but the subsequent intraday reversal suggests that the market may be overbought and ripe for a nearby correction.
Daily EUR/USD Chart
Currently holding up the market is a pair of uptrending Gann angles at 1.3140 and 1.3116. Besides a closing price reversal top, a break through these angles will signal a shift in sentiment. Although the market is expected to show weakness, the move is not expected to be a trend changing event but rather a correction. Based on the short-term move from 1.2876 to 1.3187, a reversal top today is likely to trigger a possible move into 1.3032 to 1.2995 over the near-term.
Weekly EUR/USD Chart
If traders can regroup later today then they may mount a challenge of the weekly chart resistance at 1.3240. This downtrending Gann angle is slightly below the May 2012 top at 1.3283.
At the mid-session, the key concern for bullish traders is the possibility of a daily closing price reversal top and the start of a short-term correction.
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