The bears want a wedge rally to a double top. Yet, the 4 consecutive big bull bars are strong enough so that the bulls will buy a test of the November 27 high.
The 4-day rally is testing the top of the 6 month trading range, which is the bottom of a 15 year trading range. Since the 4-day rally has been strong, the bears will probably need at least a micro double top to create a reversal down. More likely, the 1st pullback will become a bull flag and the bulls will again try to get the breakout. Since the EUR/USD daily chart is in a trading range, pullbacks usually fall below support. Therefore, the pullback will probably reach the November 27 high within a week.
The bears hope that the 4 day rally is just a buy vacuum test of resistance. They see a wedge rally from the October 6 low and a double top with the September 8 high. Because the momentum up is strong, the bears will probably need at least a micro double top before they can get a reversal down from the resistance at the top of the 5 month range and at the bottom of the 15-year trading range above. Consequently, the downside risk is to around 1.1950 over the next week.
The EUR/USD 5-minute Forex chart pulled back about 70 pips from yesterday’s high in a broad bear channel. The bulls are searching for a bottom of what they see as a pullback on the daily chart. However, the 4-day rally to resistance has been climactic. Consequently, the odds favor a trading range over the next few days.
Because the momentum up has been strong over the past week, the bulls will scalp and swing trade. Many will wait to swing trade until after at least a couple legs down from yesterday’s high and a test below the November 27 high. Alternatively, they will wait for a strong breakout above the top of the 5-month trading trading range.
Since the bears know that a trading range is likely over the next few days, day traders will sell rallies for scalps.
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.