EUR/USD has rallied strong for 6 weeks, but near top of 9-month trading range.
Trading ranges resist breaking out, so there should be at least a 2-week swing down, before there is a strong break above the Jan. 6 high at the top of the range.
Last week had consecutive very big bull Surprise Bars. They were strong enough for traders to expect at least a small second leg up after the 1st 1- to 3-day pullback.
If there is a reversal down this week, it will be from a wedge rally to a double top with the Feb. 25 high. The reversal would probably last a couple weeks and test the bottom of the most recent buy climax, which is the May 5 low.
Overnight EUR/USD Forex trading on 5-minute chart
Broke a little above last week’s high overnight, but the overnight range has also been small.
Day traders have only been scalping.
With last week’s rally being so strong, day traders are more interested in buying pullbacks than selling rallies. However, there was a 40-pip selloff overnight, and that is big enough for day traders to also look for shorts to scalp.
These factors reduce the chance of a third big bull day today: the overnight range has been small; the rally is stalling at the top of the wedge bull channel; and, Thursday and Friday were extreme big bull days, which will increase the chance of profit taking on rallies today.
After such a strong 2-day rally, the EUR/USD will probably need to go sideways for a couple days, before it can go down for a swing. Therefore, traders do not expect a strong bear trend day today.
Day traders will continue to scalp today, unless there is a series of strong trend bars up or down, but that is unlikely.