The EUR/USD daily Forex chart has consecutive big bear bars and a head and shoulders top bear flag. However, the May and June sell climaxes were extreme and now the chart is in a trading range at support. There should be buyers around the July 2 low and below the June 21 bottom of the trading range.
The EUR/USD daily Forex chart is selling off from a small head and shoulders top bear flag. But, it is in a 2 month trading range and at major support on the weekly chart. Furthermore, the consecutive parabolic wedge sell climaxes and the June 14 sell climax were extreme. Finally, trading ranges resist converting into trends. Therefore, it is likely that the trading range will continue.
Since it would take about a month to test the June 14 sell climax high, the trading range has more to go. Traders are looking for a bottom. The bulls hope that this week will form a higher low and a double bottom with the July 2 low. If this selloff continues down to below the June 21 low, the bulls will buy the breakout. They will try to create a wedge bottom with the May 29 and June 21 lows.
The bears need a strong breakout below the June 21 low. That will require a big bear bar closing below that low, and then a follow-through bear bar. The odds are slightly better for a test of the June 14 high.
Overnight EUR/USD Forex trading
Yesterday’s selloff continued overnight. But, it is now near the July 2 low of 1.1591, which is support. Therefore, the selling will probably end today around the overnight low, which is near the July 2 low. Because the 2 day bear channel is tight, the bulls will probably have to stop the selling and form a trading range before they can get a reversal up.
If this selloff is a resumption of the bear trend on the daily chart, it should not stop at the July 2 low. It should continue relentlessly far below the June 21 bottom of the trading range. Since that is unlikely, the odds are that the selling will stop today. The 5 minute chart should then reverse up at least 50 pips today or tomorrow if the bears are going to fail.