Euro bulls need a break above the 1.1400 right shoulder to end the head-and-shoulders top while the bears need to keep forming lower highs and lows.
The EUR/USD rallied to the top of the April 21 small bear leg, which was the 1st pullback from the huge reversal down earlier in the day. The bears want a double top with that pullback and then a break below the neckline of the double top. That is the April 24 low of 1.1242. If the bears succeed, the bears need to continue to form lower highs and lows, which is the hallmark of a bear trend.
The bulls always want the opposite. Most reversals fail, and last week’s break below the neck line of the head-and-shoulders top was weak. The Forex market has been going sideways instead of down. To make the bears give up, the bulls need a break above the right shoulder. That lower high came on April 21 and it was around 1.1400.
The bulls rallied recently and are trying to break above the April 21 small lower high. The bulls need follow-through. Otherwise, there is still a potential small double-top bear flag. The rally has already gone far enough above the 1st top by enough to probably eliminate the pattern. Instead, it looks like the pair is trying to test the top of the right shoulder -- around 1.1400. The two-hour rally has a series of buy climaxes within it. That increases the chances of at least a couple hours of trading range price action. Without a much stronger bull breakout or a strong bear reversal, the odds are that bulls and bears will make 10 – 20 pip scalps today. It is unlikely that it will go very far in the middle of a month-long trading range when there is an FOMC report tomorrow. Even though a strong trend is not likely, if one comes, traders will swing trade and not question the breakout.