The EUR/USD's 240-minute chart reversed up yesterday from a Double Bottom (DB) at the neck line of the Head-and-Shoulders Top. The rally is strong enough so that bulls will buy the 1st pullback. The odds are that there will be at least one more leg up. Yet, the rally is still part of a trading range, and not yet the start of a bull trend.
The daily EUR/USD chart yesterday formed a bull trend bar and a Micro Double Bottom. Since it also has a double bottom with the August 31 low, it is a nested pattern. Hence, the probability of a bounce is higher. Furthermore, it is at the bottom of a 3-week trading range. The odds are that it will rally over the next few days.
Yet, if it breaks below yesterday’s low, it could quickly fall for a measured move down. Since most tops fail and the daily chart has nested Head and Shoulders Tops, the odds are that the chart will go sideways to up, rather than down, for several days.
Overnight EUR/USD Globex
The EUR/USD daily chart reversed up strongly yesterday in a double bottom with the August 31 low. That was the neck line of a 2-month Head-and-Shoulders Top. Since most tops fail, the odds were that this one would as well. Yet, a failed top does not mean a bull trend. It means either a bull trend or a trading range, and a trading range is more common.
The rally continued overnight on the 60-minute chart. Yet, it lacked consecutive big bull bars closing on their highs. While the rally is moderately strong and will probably have a 2nd leg up after the 1st pullback, it looks more like a bull leg in a trading range rather than the start of a bull trend.