The EUR/USD is in a sell climax on the daily chart, but there is still room to the support of the April and March lows. There is a wedge bear channel on the 240-minute chart and it is very tight. This means that it will breakout soon. There is a 25% chance of a bear breakout and an acceleration down to far below the support, which is only about 40 pips below the overnight low.
There is a 75% chance of a breakout above the wedge bottom and then a rally that has about 10 bars and 2 legs. If the bulls get their rally, they will look to take profits around resistance, which is at the November 12 top of the wedge around 1.0820. This is also the bottom of the 7-month trading range. A rally could be the start of a reversal up from a double bottom with the March or April low, but the channel down from the October high was so tight that the first reversal up will probably be sold.
The bulls more likely will need a test of the November low before they are able to get a swing up. This means that the bulls will not hold for a bull trend and will take profits at resistance. This also means that the best the bulls can realistically hope to see over the next moth or two is a trading range. The daily and weekly charts are in a bear trend, and the rally, if the bulls get it, will probably be a bear rally and a bear flag.
There is about a 25% chance that they can create a strong reversal up and a bull trend without a small double bottom first. However, this would probably require a very big rally lasting several days. If traders see that, they will quickly buy for a swing trade up. There is also about a 25% chance of a strong bear breakout below the March lows before a bear rally. If the bears get it, traders will short for a swing down. More likely, the sell climax will lead to a trading range that will last at least a month, and traders will look to buy low, sell high, and be quick to take profits. The trading range rally has not yet begun.
Bulls have been able to consistently make money over the past several weeks by buying new lows and scalping. The wedge is tight and at support, and it has lasted a long time. These factors make a change in the market’s behavior likely to begin within the next week or two.