Yesterday was a big bull-trend bar that reversed up from below a 4-month trading range. It was also a reversal up from a wedge bull flag. If today ends up with a bull body, that will confirm the reversal. It would therefore make a 2nd leg sideways to up likely. The rally is testing a major lower high. The odds favor a small trading range over the next week
Yesterday was a strong reversal up from a wedge bull flag at the 20-week EMA (chart not shown today). Yet, the 3-month bear channel on the weekly chart was tight. Therefore, the bears will probably get a test down within a couple of weeks.
However, the 2-day rally on the daily chart was strong. Furthermore, it is a breakout above a wedge bottom. Consequently, the bulls will probably get 2 legs sideways to up. The odds are that the 2-day rally will pause around the October 12 high. A trading range will probably form there, like in the 2 weeks after that high.
While it is possible that this rally does not pause and continue up to a new high, the weekly bear channel was tight. Therefore, this 1st reversal up will likely have a pullback within a week. The bears will see the pullback as a reversal down from a double top with the October 12 high. More likely, the bulls will get a higher low and test back up to the high of the current leg up.
These reversals are all within a 4-month trading range. My 80% rule says that 80% of attempts to convert a trading range into a trend fail. Consequently, the odds favor a continuation of the 4-month trading range for possibly a month or more.
Overnight EUR/USD Forex Trading
The EUR/USD 5-minute Forex chart continued its rally overnight. However, it will probably stall around the October 12 major lower high around 1.1880, and then go sideways for at least a few days. Since the rally is now within 25 pips of the target, the odds are that bears will begin to sell for scalps and the bulls will begin to wait to buy pullbacks instead of breakouts. The result will probably be increasing trading range trading today.