After Monday’s buy climax in the euro, it has continued to pullback. The 60 minute chart of the EUR/USD is in its 2nd leg down, and it just reached a 50% pullback of the strong rally of the past week. There will probably be buyers here, but the overnight selling on the 5 minute chart has been in a tight bear channel.
When that is the case, the 1st reversal up is usually a minor reversal. This means that the best the bulls can hope to see for at least a couple of hours is a trading range. If they are able to create one, they then have a chance of forming a major trend reversal followed by a swing up. Until then, the swing down will continue. Bears at the moment are selling the market. Others who trade for a living prefer smaller risk and will forgo current profit potential to achieve it. They will instead wait to sell a pullback. The selling is climactic on the 5 minute chart, and there should be a pullback or at least a tight trading range soon.
The selling on the 5 minute chart of the EUR/JPY has been in a parabolic sell climax. The odds are that it will be followed by a trading range soon, even though the bears will remain in control until the bulls create a reversal. Once in a trading range, both bulls and bears will scalp.
The 60 minute chart of the USD/JPY had a sell climax last week, and it has been in a trading range for several days. The bulls created a higher low major trend reversal overnight, and the rally is near the top of the 3 day trading range. There is about a 40% chance that a major trend reversal will be followed by a strong swing up, and a 60% chance that the trading range will continue. The rally on the 5 minute chart has been weak and looks more like a bull leg in a trading range than in a new bull trend.