The daily chart of the EUR/USD Forex market had a huge rally and a huge selloff in March. It has reversed up from an expanding triangle bottom this week.
While today is the 5th consecutive bull day, the rally will probably not go above the March high without at least one pullback lasting a few days. There is no sign of a top, but the EUR/USD is entering a resistance zone. It is now at the 20 day EMA. A 50% retracement is a little higher. The bulls want the bull micro channel continues up to the March 16 sell climax high without a pullback, but that is unlikely.
The bears are hoping that the 5 day rally is just a bear flag. They had a very strong reversal down from a very strong rally in March. That typically results in at least a small 2nd leg sideways to down.
But after 5 days up, the bears will probably need at least a micro double top before they can get more than a 2 day pullback. Also, even if they drive the market down to the March low, there is still an 8 month trading range. Trading ranges resist breaking out. It is therefore more likely that a selloff would bounce around the March low. Traders should expect a small trading range for the next few weeks in the bottom half of the 8 month trading range.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market rallied 100 pips overnight. The bars were not big and there was a lot of overlap, but the channel was tight. Day traders have been mostly looking to buy pullbacks. But, with the sharp pullback over the past hour, they will also look to sell rallies for scalps.
This selloff is big enough to make a big rally from here unlikely today. The rally has been strong enough to make a bear trend. Today will probably continue sideways to up.