The 4-week bear trend resumed overnight after another lower high. The bulls want a reversal attempt up from a test of the January 11 low.
The EUR/USD Forex market resumed its 4-week bear trend yesterday. The bulls want a reversal up from a test of the January 11 higher low. That reversal would also create a wedge bottom over the past month. Hence the reversal would have a higher probability of a rally up to the top of the 5-month trading range at the February high.
Yet, the bears want a strong breakout below that support. Furthermore, they want to drive the market below the January low. Hence, that would be a new 15-year low. In addition, it would make a test of par (1.0000) likely this year.
Overnight EUR/USD
After Trump’s speech last night, the stock market rallied and the bond market sold off. In addition, the 4-day rally in the EUR/USD revered down from a lower high double top bear flag with the February 16 high. The bears will probably get a break below the neck line of the double top. That is last week’s low. They then hope for a measured move down. Hence, they expect a test of the January 1.0453 low, which is about 70 pips below.
While the EUR/USD Forex market sold off about 70 pips since the speech, it did so in a series of small sell climaxes on the 60-minute chart. That is trading range price action. It therefore means that the bulls still have about a 50% chance of a reversal up from around the January 11 low.
Furthermore, the selloff over the past 5 hours has been in a weak bear channel. It therefore looks more like a leg in a trading range rather than a resumption of a bear trend. Hence, while the odds favor more selling over the next week, they also favor an attempt at a bottom at around 1.0450. In addition, the overnight selloff will probably bounce around last week’s, which is only 20 pips lower.