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EUR/USD: Bears Buying Back Shorts

Published 08/18/2022, 09:42 AM
Updated 07/09/2023, 06:31 AM

EUR/USD Daily Chart

  • Some of the 'sell-the-close' bears who sold the August 15 close are disappointed and are buying back shorts at their entry price. They sold at the close of August 15, betting on quick follow-through, and are disappointed by the past two days. This will increase the odds of being more sideways.
  • Bulls know the Sell the Close bears are disappointed and will buy where those bears are exiting.  
  • Some bears will stay short, betting that the August 15 bear trend bar will get the 2nd leg down.
  • If one senses confusion when they look at the EUR/USD daily chart, they are reading it correctly.
  • The probability is neutral, and traders should assume a 50% probability of breakout up or down.
  • The market may have to test down to the 1.0000 big round number and form a double bottom major trend reversal. Most bulls would prefer this as it would allow them to buy low in a trading range or early stages of a bull trend.
  • The odds favor that the market will test the middle of the June – July trading range sometime over the next three months.
  • Bears want the market to breakout below the neckline of the July 27 low and go for a measured move down and break below the 1.000 big round number, which is unlikely.
  • Overall, traders should wait to see the breakout since the probability is neutral here.

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