The EUR/USD is forming its 5th consecutive doji day on the daily chart. For the past few days, I said that at least one more push up was likely before the EUR/USD daily chart might try to form a Low 4 sell setup. The rally over the past 24 hours and the reversal down last night is an attempt by the bears to create a top for the next couple of weeks. The overnight selloff did not reverse the entire rally, and the EUR/USD might therefore be in a broad bull channel. If so, it could continue higher and test the October 15 lower high around 1.1500.
However, the bulls completed their minimum objective overnight, and a selloff down to at least the March 24 higher low around 1.1150 is now more likely. The bears need a strong breakout below the April 6 low of 1.1324. This is the neck line of the micro double top of the past 5 days, and it could lead to a swing down. As long as the bulls are able to prevent a strong bear breakout, they still can test higher. However, the ingredients are there for a swing down of at least 200 pips.
Until there is a breakout up or down, day traders will continue to scalp, like they been doing for the past 6 days. The EUR/USD has been in a 40 pip trading range for the past 5 hours, and traders have been scalping. They often use limit orders to sell above prior highs and buy below prior lows. Other traders wait for reversals and enter on stops.