The weekly EURUSD Forex chart has been in a strong bull trend for 7 months. Yet, it has a series of buy climaxes and is now testing resistance.
The weekly EURUSD Forex market has rallied strongly for 7 months. However, the rally has had a series of consecutive buy climaxes. This is therefore a type of parabolic wedge buy climax. Hence, traders should expect a trading range soon.
While the big bull trend bars represent strong bulls, the bad follow-through after each bar is a small exhaustion area. This type of rally usually leads to a bigger pause, like about 10 bars and 2 legs. The minimum goal for the pullback is the bottom of the most recent buy climax. That means about a 250 pip pullback to last week’s low.
Because buy climaxes can continue for a long time, this rally might continue to above the bottom of the July 2010 breakout point of 1.1876 before pulling back. However, the pullback typically begins after 3 – 4 climaxes, and this rally has already had at least 3.
Can the bull trend continue for a measured move up from the 30 month trading range? Even if it does, this rally represents exhausted bulls. Therefore the odds still favor a pullback beginning within a couple or weeks, or after 1 more buy climax next month.
Overnight EURUSD Forex trading
The rally on the daily and weekly charts is a buy vacuum up to resistance. The odds favor a reversal down into a bear leg in a trading range soon. Because today has an FOMC announcement, there is a catalyst for a big move up or down.
All financial markets usually enter tight trading ranges for at least 2 hours prior to the Fed interest rate announcement at 11 a.m. PST. Furthermore, the EURUSD Forex market has been sideways for 4 days. The odds are that today will continue the trading range price action into the report.
There is usually a breakout after the report. Yet, 50% of breakouts reverse. Therefore, day traders who want to trade after the report should wait at least 10 minutes before entering. In addition, they will have to make quick decisions because the bars are often big and reversals are common.