The 3-week selloff lacked consecutive strong bear bars on the daily chart. It is therefore more likely a bear leg and a wedge bull flag in the 4-month trading range. The January 11 low of 1.0453 is the next support.
Since legs in trading ranges usually go below support before reversing up, this selloff might fall further. There is a wedge bull flag as well. The odds are that the EUR/USD will rally over the next week or two to at least last week’s high. It will probably stall there.
There is a nested wedge bottom on the 240-minute chart (not shown). This therefore increases the chances of a successful reversal up. The bulls want a head and shoulders bottom on the daily chart, while the bears want a new 15-year low. Because trading ranges resist breakouts, the odds are that the EUR/USD will rally at least 100 – 200 pips over the next few weeks. Yet, there is no clear bottom yet.
Overnight EUR/USD
The EUR/USD Forex market was in a 25-pip range overnight. The bulls are therefore trying to stop the selling. If they are successful, they will then try to create a buy setup for a rally up from around the January 11 major higher low.
Since the selloff on the 240-minute chart is in a tight bear channel, the bulls will probably need a micro double bottom before they can create a swing up. Hence, today will probably be mostly sideways as the bulls try to create their bottom. Because the selloff is now close to the January 11 low, the odds are that it will continue down to that low before the rally begins. Yet, it can begin at any time.