After a successful test of the 1.4000 level, the Euro is once again posting strong gains as traders boost bets that the European Central Bank will begin raising interest rates as early as next week.
Given the recent news developments and chart pattern, the current price action suggests that this week’s bottoming action and subsequent rally were the result of both strong fundamental news and technical formations.
Technically, the Euro found support recently at 1.4020, slightly above the 50% level of the 1.3752 to 1.4248 range at 1.4000. The key, however, to the bottoming formation and subsequent rally has been the two powerful uptrending Gann angles at 1.4088 and 1.4033 today. The Euro is expected to be as strong as these angles. In other words, look for the uptrend to continue as long as these angles remain intact. Breaking these angles will be the equivalent of breaking a swing bottom.