After an Expanding Triangle Bottom at the support of the December 2015 low, there is now an Expanding Triangle Bear Flag attempt. Yet, the rally was strong enough to make at least one more leg up likely.
The 240-minute EUR/USD chart rallied yesterday after a lower low major trend reversal. In addition, it formed at the major support of the December 2015 low. As a result of the strong momentum up yesterday and the market being at support, the odds favor higher prices this week. Yet, because the chart has been sideways for 18 months, any rally will be a leg in the trading range, just as the November selloff was. Traders will therefore continue to buy low, sell high and take quick profits.
Overnight EUR/USD Forex
Yesterday reversed up from a Lower Low Major Trend Reversal. The bottom was also an Expanding Triangle. After breaking above the 12-day trading range, the bears are trying to reverse the EUR/USD back down from an Expanding Triangle bear flag. Yet, yesterday’s reversal up was strong.
Furthermore, it came from just below major support. A 2nd leg up is more likely over the next week. Therefore, traders will buy the selloff that began last week. Because yesterday’s rally was almost 300 pips, a 50% pullback would be 150 pips. While that is unlikely, bulls will remain bullish unless a reversal down falls 20 or more pips below that.