The weekly EUR/USD Forex chart has strong momentum up. Yet, because the rally has had a series of buy climaxes, the odds favor a 5-10 bar pullback soon. Furthermore, it is just below the resistance of the 30 month high and a measured move target.
The 6 month rally in the EUR/USD Forex market has been strong, especially over the past 4 months. Yet, the weekly chart has had a series of buy climaxes. Since that typically leads to a 5-10 bar pullback (weeks, since this is a weekly chart), that is likely here.
The daily chart had a strong enough breakout on Thursday to make at least a small 2nd leg up likely. That might be enough to break above the 30 month high. However, most trading range breakouts fail. In addition, a series of consecutive buy climaxes like those on the weekly chart usually leads to a pullback. Furthermore, the daily chart has a parabolic wedge and is at a measured move up from the early July wedge top. Consequently, while the bulls have strong momentum, the bears have a buy climax at resistance.
Minor reversal into small trading range soon
Since both bulls and bears have good technical factors, the odds favor a more balanced market soon. As a result, a trading range is likely to begin this week. The minimum goal would be a couple legs sideways to down over 2 weeks. Yet, it could last longer.
The monthly chart has 4 consecutive strong bull trend bars. This means that the bulls are eager to buy. Therefore, they will probably buy the 1st 1 – 2 bar pullback. Hence, the best the bears can probably get over the next couple of months is a pullback into a bull flag on the monthly chart.
Overnight EUR/USD Forex trading
The 5 minute chart has been sideways for 3 days. Furthermore, the range has only been 20 pips over the past 4 hours. In addition, Wednesday’s FOMC announcement will probably limit any move for the next couple of days. Consequently, day traders expect to scalp today. While a trading range is likely, they will always be ready for a breakout up or down.