The EUR/USD daily Forex chart has pulled back for 6 days from a strong rally. The odds favor at least a test up to last week’s high. The bears want the 6-day pullback to continue into a reversal of last week’s rally.
The EUR/USD daily Forex chart reversed down over the past week from a strong rally. The reversal down is not as strong as the rally. In addition, it is stalling at support. The prior highs and lows over the past 4 months provide support. So do the 50% pullback, the 20-day EMA, and the 20 week EMA (not shown). The odds are that the bulls will try to get a 2nd leg back up to test the October 12 major lower high.
The bears need a strong break below support, and especially below the November 7 major higher low. However, the strong bull trend on the weekly chart make the bear breakout unlikely without at least a double top with last week’s high or a stronger reversal down.
The past 4 days have had small bodies and ranges, and reversed every day. This is trading range price action. Therefore, the 6 day selloff is more likely a bear leg in a small trading range than the start of a bear trend. The odds favor a test back up within a week. However, yesterday and today have been small days. Furthermore, tomorrow is a holiday. The odds are that today will be another small day.
Overnight EUR/USD Forex trading
The 5 minute chart has been in a 50-pip range for more than 24 hours. There is no sign of a breakout. While the odds favor a 100-pip rally back up to last week’s high, day traders will continue to scalp until the momentum up or down increases.