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EUR/USD: One More Up Push

Published 04/06/2016, 10:46 AM
Updated 07/09/2023, 06:31 AM
EUR/USD
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The EUR/USD has a nested wedge top on the daily chart and it has been sideways for 4 days. Because thus trading range is holding above the March 17 strong bull breakout, there is a possibility of a measuring gap and a measured move up.

March 17 was an attempt at a top. Instead, the bulls got a breakout. When the pullback from a breakout above a top stays above that top, there is a 60% chance that there will be at least one more leg up. However, if the bulls get that leg up, then there is a 60% chance that the daily chart will form a Low 4-top pattern. This is a pattern where there are two legs up to a possible top (March 10 and 17), and then a bull breakout that is followed by another 2nd leg top.

The October lower high around 1.1500 is also a magnet, and it is just above this 4-day trading range. Whether or not the EUR/USD tests that lower high, the rally from the December low looks more like a leg in a trading range, which it is, than the start of a bull trend. There have been many big bull bars, but the follow-through has been bad. When a rally is made of a series of buy climaxes that all have bad follow-through buying, instead of relentless buying, the odds favor a trading range.

The odds favor one more push up on the daily chart, and then a TBTL Ten Bar Two Leg correction on the daily chart. The EUR/USD has been sideways for 4 days. Although it sold off overnight, the selloff was weak and had many reversals, It has rallied over the past 2 hours, but there has been bad follow-through buying after 3 brief big bull bars on the 5-minute chart.

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This is trading range price action, and is happening in the middle of a 4-day range. Unless the EUR/USD has a strong breakout up or down traders will continue to scalp, as they have been. Day Traders know that one more leg up is likely and they have been buying pullbacks down to around the January 17 high. However, they need a strong breakout on the 5-minute chart before they will be willing to swing trade their longs. The odds are that the breakout will come within the next few days, but it has not begun yet.

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