The EUR/USD daily Forex chart has been in a trading range for 2 months. Over the past month, it has formed a triangle. The chart is therefore in Breakout Mode. The bulls have a head and shoulders bottom and the bears have a bear channel.
The EUR/USD daily Forex chart has been forming lower highs and higher lows for a month. This is a triangle, which is a Breakout Pattern. The probability of a successful breakout up or down is 50%. Furthermore, the 1st breakout has a 50% chance of reversing. Because the triangle is now very tight, there will probably be a breakout attempt within a week.
Today is Friday and therefore the weekly chart (not shown) is important. Last week was the 2nd buy signal bar in 3 weeks. But, it had a bear body and therefore did not attract many buyers this week. If the bulls can get this week to close on its high, traders will be more willing to buy above this week’s high next week.
The bears always want the opposite. At a minimum, they want today and this week to close below last week’s 1.1403 high.
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart was in a tight trading range overnight. It rallied 50 pips to above last week’s high on this morning’s unemployment report. However, it then reversed back down 40 pips.
Traders are paying attention to last week’s high. With the Big Up, Big Down move of the past 20 minutes, today might be a trading range day. Then, toward the end of the session, traders will decide whether to close the week above or below last week’s high.
While any day can be a strong trend day, the overnight price action is neutral. In addition, the daily chart is at the apex of a triangle. Consequently, day traders will continue to scalp until there is a strong breakout up or down.