The EUR/USD daily Forex chart has a bull trend bar so far today. But, after 2 surprisingly big bear bars, a minor reversal and a bear flag are more likely than a bull trend reversal.
The EUR/USD daily Forex chart broke strongly below the 3 month trading range on the daily chart. The 3 week selloff has been strong and the bears have a measured move target at around 1.12.
But, the price is now far below average (the 20 day EMA). There are fewer bears willing to sell this low. They prefer to sell closer to the average price. The bulls know that and they therefore are willing to buy for a 1 – 3 day bounce.
With a relative absence of bears and now some aggressive bulls here, the selling will probably stop for a few days. The result will probably be several days of sideways to up trading.
Bull flag on the weekly chart
It is important to note that the bears do not have consecutive bear bars that both close below the June 21 bottom of the range. Today will likely close below, but it might have a bull body. That would be a sign of a weaker bear breakout.
In addition, the bull trend in 2017 was very strong, The selloff since February is more likely only a pullback in that trend on the weekly chart. The pullback is now around 50%. Also, it is a Breakout Test of the top of the 2015 – 2016 trading range. Therefore, even if the selloff continues down to the 1.12 measured move target, the bulls would then probably get a rally back to the June high. That rally would probably last many months.
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart has rallied 40 pips in the past 2 hours, reversing an early selloff in the European session. This is probably a sign that the bears are taking partial profits and bull scalpers are beginning to buy. Consequently, the 60 minute chart will begin to enter a trading range for a few days. This rally is the 1st leg up in that range, and today might not be the final bottom of the range.
When a market enters a trading range, there are swings up and down. Day traders will therefore be more willing to hold onto positions for 30 – 50 pip swings. Furthermore, scalpers will trade reversals for 10 – 20 pip scalps.