FX traders should watch closely where EUR/USD closes on Monday, as this will determine its direction in coming sessions.
For now, the direction of this market is very much in the balance.
EUR/USD's rebound has quickly surged to break the 1.0176 Fibo, a 61.8% retrace of the 1.0369 to 0.9864 (Aug to Sept) EBS drop.
However, those that are bullish spot are now faced with the thick Ichimoku daily cloud that currently spans the 1.0201-1.0370 region.
The cloud could well limit the upside and cause a top to be formed.
Especially if EUR/USD fails to register a daily close above the 1.0176 Fibo, that would hint at a bull trap: which is set when a market breaks above a technical level but quickly reverses.
That is usually a bearish sign.
The euro jumped to a more than three-week peak versus the dollar on Monday, as European Central Bank officials pushed the case for further aggressive monetary tightening. nL1N30J0BR.
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