The EUR/USD Forex market on the daily chart has been in a trading range for 4 months. It has had many strong legs up and down. Trading ranges resist breaking out and therefore traders continue to bet on reversals until there are consecutive closes above or below the range.
The 5-day rally has been strong. Traders will probably buy the 1st 1 to 3-day pullback. So far, today is a doji day after Friday’s small break above the September 21 high. This is not a strong breakout. Today could be the start of a brief pullback. But, as I said, the bulls will probably buy it.
The bears want today to close near its low. They would then see the 5-day rally as the final leg of an expanding triangle. They want a reversal down. There would also be a double top with the September 21 high.
However, legs in trading ranges test nearby resistance. It is, therefore, more likely that the EUR/USD will have to test the September 10 lower high before the bears can begin a 2 to 3-week swing down to the bottom of the range.
Overnight EUR/USD Forex trading
The 5-minute chart of the EURUSD Forex market has been sideways in a small trading range overnight. Traders are scalping reversals up or down. If there is a series of big trend bars up or down, day traders will switch to swing trading.
There is room to the September 10 lower high, which is a magnet above. Since it is only 10 pips above the overnight high, the EUR/USD could easily break above it today. The bulls want today to close far above that resistance today and on the day’s high. That would increase the chance of a break above the September high.
However, with Friday stalling at the top of the 7-week range and with today so far being a small day, today will probably continue to be small.
The fight will be over the close. If today closes near its high, traders will expect higher prices tomorrow. If today closes near its low, traders will see today as a sell signal bar for at least a 1 – 3-day pullback.