The EUR/USD daily Forex chart pulled back from a 5 day bull micro channel. The rally is still just a leg in a trading range.
The EUR/USD 5-minute chart has been sideways for 3 days. There were buyers below yesterday’s low overnight. In addition, there was a sharp rally about an hour ago. However, the odds favor a micro double top with Yesterday’s high or slightly higher. Consequently, the bears will look for the rally to reverse down.
Even of the bulls break strongly above yesterday’s high, the rally will still probably reverse down from below the February high. Therefore, the bears will begin to look for sell setups, expecting about a 150-pip selloff.
Because the daily chart is now in the top half of a 2-month trading range, the bulls will take profits above prior highs. In addition, they prefer to buy pullbacks and are less willing to buy a breakout above a prior high.
The odds are that the 3-day trading range will continue today. However, there will probably be a 150 selloff within the next week.
The EUR/USD daily Forex chart reversed up from below yesterday’s low. This was likely after a 5-day bull micro channel. However, every rally and selloff in a trading range is more likely to fail than lead to a breakout. Consequently, it is more likely that this rally will reverse down before breaking strongly above the February high.
Since the weekly chart is in a bull trend and there is a magnet of a bear trend line above, the odds favor a bull breakout within a couple of months. However, to trade like any one leg up or down will lead to a successful breakout is a low probability bet. This is because 80% of breakout attempts fail when there is a trading range.
Most reversals come from micro double tops and bottoms. The bears will try to create a micro double top over the next few days. The minimum goal would be a 100 – 150 pullback from the 5 day rally.
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