The EUR/USD Forex market on the daily chart has rallied in a Small Pullback Bull Trend since June 19. However, it is still in a month-long trading range. Therefore, the probability of a successful breakout above the March 9 high is only slightly better than 50%. But if the bulls get consecutive closes above that high, traders will conclude that the yearlong trading range has ended and a bull trend has begun.
The bears want to get a reversal down. They prefer to get it from below the June 10 or March 9 highs. Most importantly, they need to reverse the trend before there are consecutive closes above the March 9 high. They do not want traders to believe that the EUR/USD has evolved into a strong bull trend.
The bears need a couple big bear days for traders to conclude that the month-long rally is ending. Without that, traders will continue to expect at least slightly higher prices.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market has rallied for 4 hours. It is again above the July 9 high, which was the top of a small wedge rally.
The bulls want today to close above yesterday’s high. Today would then be a breakout day. Traders would then look for a measured move up. That would lead to a test of the March 9 high.
The odds of a test of the March 9 high will be higher if today grows into a big bull day closing far above yesterday’s high. But the minimum that the bulls want is a close above yesterday’s high. They therefore will buy pullbacks today.
The rally has been having 10 – 15 pip pullbacks after every few bars. Also, the bull bars are not particularly big. Traders see that rally as not very strong. Also, the EURUSD is stuck at yesterday’s high. This increases the chance of the EUR/USD entering a trading range around yesterday’s high.
However, today is still in a bull channel on the 5 minute chart. Therefore, it is easier for day traders to make money as buyers.
But if the EUR/USD begins to have 20 – 30 pip pullbacks, day traders will begin to sell for scalps. If there is a trading range that lasts a couple of hours, the bears will have a chance of a reversal down.