The daily EUR/USD has been in a trading range for 9 days. The bears see a bear flag. The bulls probably will need a test down and a major trend reversal before any significant rally.
The EUR/USD has been in a trading range for 9 days after a sell climax test below the December 2015 low. Many bulls want another test of that level before they will buy.
While the 240-minute chart is trying to reverse up from a double bottom higher low major trend reversal, there have not yet been many strong bull bars. As a result, the 4-day rally might have to test down before going higher. Regardless of whether there is a test down, the odds are that the downside will be limited for a couple of weeks. Furthermore, the EUR/USD will probably have a couple weeks of sideways to up trading. Targets are the lower highs on the 240-minute chart and possibly the bottom of the yearlong trading range at around 1.0800.
The bears want a breakout below the 18 month trading range. Since 80% of breakout attempts fail, the odds are that there will be at least a bounce before the bears try again.
Overnight EUR/USD
The 60-minute EUR/USD Forex chart reversed every hour overnight. This is therefore a reflection of the balance and confusion on the daily chart. There is no sign yet of the direction of the breakout. The bears had momentum, but the bulls have support at the December 2015 low.
Because the November selloff was so strong, the bulls will probably need one more test down to the December 2015 low before they will able able to have a significant rally. The bears need a strong break below that low. Because most trading range breakouts fail, the odds are that the 18-month trading range will continue. As a result, the EUR/USD will probably base over the next several weeks and then work higher. The 1st important target is the breakout point of the November low.
Obviously the EUR/USD will eventually break out of its 18-month range. Yet, betting on any one strong attempt is a low probability bet. Therefore, traders continue to take profits after days or a couple of weeks. With the 9-day range, many traders are taking profits after hours. Forex day traders are also mostly scalping.