The EUR/USD daily Forex chart so far has its 3rd consecutive bull bar after the bear breakout below the 4 month range. The selloff from the January 10 high is also in a wedge bear channel. A bear channel is a bull flag. That means there is usually a bull breakout.
However, the 6-day selloff to the new low was strong enough to make most bulls want to see a micro double bottom. Therefore, this 3-day rally will probably have a pull back within a few days to test last week’s low.
The bears see the 3-day rally as a pullback from the breakout below the 4 month range. But, there has been no follow-through selling. In addition, most breakout attempts fail. They need consecutive closes at a new low to make traders believe that this bear breakout is the start of a bear trend. Without that, the odds are that it is just another strong leg in the 4 month range.
The 3-day rally is strong enough so that the bears will probably need a micro double top before they can attempt again to break below the range. With the bears needing a micro double top and the bulls needing a micro double bottom, the next few days will probably be sideways.
Overnight EUR/USD Forex Trading
The EUR/USD 5-minute Forex chart has been in a 35 pip range overnight. The bulls are trying to erase the March 7 sell climax. Its high is therefore a magnet. It is only about 30 pips above today’s current high. The momentum up over the past 3 days is strong enough for the bulls to reach that target this week. If they do, the daily chart will be back to neutral after being slightly bearish last week.
Because this 3-day rally has not been particularly strong, it will probably lead to several sideways days instead of a bull trend. Day traders will expect to scalp for 10 – 20 pips, as they have been doing for most days over the past 4 months.