The EUR/USD on the daily chart has rallied for 2 days from a High 1 bull flag buy signal bar. However, there was a strong sell signal bar last week and there is an extreme buy climax. Also, this is taking place at the resistance of the September 2018 high. Therefore, despite the strong bull trend, many bulls will take some profits soon.
If enough do, the EUR/USD will pull back for a couple weeks to around the EMA and the March 9 high. While yesterday and today so far are good for the bulls, traders should expect that either the pullback began last week or it will begin after a brief new high, like on June 10.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market rallied overnight and it is testing last week’s high. However, the rally has had 3 legs up in an bull channel. It is therefore a wedge, which is a type of buy climax.
Buy climaxes usually attract profit takers. While the bulls want the rally to continue to above last week’s high today, the wedge bull channel will probably evolve into a trading range within a couple hours.
So far, day traders have mostly only been buying for 20 pip scalps and a swing up. However, they will begin to sell reversals down from the intraday high for 10 – 20 pip scalps.
Can today continue up all day? Probably not because the range is already about average and last week’s high is resistance. Therefore either sideways trading or even a reversal down is more likely.