Yesterday was the second consecutive small bear day.
By trading below Wednesday’s low, EUR/USD triggered a Low 2 sell signal and a sell signal for a double top bear flag (November 18 and 30). The bears want the yearlong bear trend to continue. However, there should be a trading range lasting at least a couple months beginning soon since the EUR/USD is in the middle of a 7-year trading range.
Yesterday was a weak entry bar. It increases the chance that the 3-week trading range will continue.
The bulls are hoping that the EUR/USD is in a Small Pullback Bull Trend. If there is a breakout above the Nov. 18 and Nov. 30 double top, a measured move up would be back to near the bottom of the yearlong trading range.
A strong breakout would likely be the start of a couple months of sideways to up trading.
Today is the last day of the week. Weekly support and resistance can be important, especially at the end of the day.
This week triggered a buy signal on the weekly chart after a sell climax. However, this week so far is a doji bar.
The bulls want the week to close on its high and far above last week’s high. That is unlikely after 2 small days.
At a minimum, they want the week to close above the open. If there is a bull body on the weekly chart, it would increase the chance of sideways to up trading next week. The bigger the body, the more likely next week will be high.
This week was a bounce in a bear trend. It is a Low 1 sell signal bar for next week.
The bears want the week to close near its low. The bigger the bear body, the more likely next week will continue down. If there is a small bear body (or small bull body), next week will probably be sideways.
Since the EUR/USD is in the middle of a 3-week trading range, it is more likely to continue sideways for at least a few more days.
However, the strong bear trend can resume at any time, and the extreme sell climax can lead to a sharp reversal up at any time.
It is important to remember that the entire 2021 selloff is still in the middle of a 7-year trading range. The EUR/USD is therefore more likely to begin to go sideways for at least a couple months before it breaks below the trading range low, if is going to break below within the next year.
It may trade lower for a few weeks, but it should begin to form a trading range soon.
The top of the range might be around the bottom of the September 2020 to September 2021 trading range at around 1.16.