The EUR/USD Forex market on the daily chart has been in a trading range for four weeks. Because it has had three legs up and higher highs and lows, it is also a wedge top. But it is mostly a trading range and, therefore, a breakout mode pattern. There is a 50% chance of measured move up or down.
If the bulls get their measured move up, the trading range will probably be the final bull flag. Traders will expect a reversal down within a few weeks, and they will look for a selloff lasting several weeks.
If the bears get their downside breakout, traders will expect a test of the breakout points. These are the June 10 and the March 9 highs. There is no sign of an impending breakout. Therefore, traders believe that there is a 50% chance it can go either way. In the meantime, they continue to look for reversals ever few days.
While last week is a sell signal bar on the weekly chart, it was the first bear bar in nine weeks. Traders have been so eager to buy that this week might not fall below last week’s low to trigger the the sell signal.
Even if the bears trigger the sell signal, the EUR/USD has been sideways for five weeks in a strong bull trend. The odds are against a major reversal down. The bulls would return within several weeks.
Overnight EUR/USD Forex Trading
The 5-minute chart of the EUR/USD Forex market reversed up from last week’s close, but has been in a 20-pip range for four hours. Day traders were buying overnight, but they now are also selling reversals down from the high for scalps.
Today’s low is above Friday’s low and today’s high is below Friday’s high. Therefore, today is an inside day after an outside day on Friday. If today closes near its high, it will be a buy signal bar for an ioi bull flag. Traders would then expect at least slightly higher prices tomorrow.
Why not expect a resumption of the four-month bull trend? Because the EUR/USD has been in a trading range for a month. Traders know that reversals every few days are more likely.