Because the 240-minute EUR/USD chart has both a reasonable double top and a reasonable double bottom, the bulls and bears are balanced. Hence, the EUR/USD is again in breakout mode. Last week’s rally broke strongly above the bear trend line. The odds therefore favor at least a bounce from around last week’s low. This would therefore create an attempt at a major trend reversal.
The EUR/USD 240-minute chart has had repeated swings up and down in tight channels. Yet, it is still in its 4-month trading range. Furthermore, that range is a the bottom of a yearlong trading range.
Major Trend Reversal Attempt This Week
Last week’s rally broke far above the bear trend line on the 240-minute chart. In addition, it had many bars completely above the moving average. This is a sign of strong bulls. As a result, the odds are that it will find support around last week’s low. Hence, it will probably try to create a major trend reversal this week. Since the 2 day bear channel is tight, the bulls will probably need to stop the selloff for a day or two before they can create the bottom attempt.
Double Top Bear Flag
The bears see the 2-day selloff as a double top bear flag. But, because the selloff is still above the January 11 major higher low, it is more likely just part of the trading range that began with that low. Since reversals within trading ranges usually come after breaking through support and resistance, the bottom might not come until after a break below that January 11 low.
Head-And-Shoulders Bottom
On the daily chart (not shown), the bulls want this month long selloff to rally from above the December low. If so, they would buy the reversal up because that would be an attempt at a higher low major trend reversal. Furthermore, it would be a head and shoulders bottom.