The 240 minute EUR/USD chart is still in a trading range. The bulls see a 5 week bull flag. The bears see a wedge top and now a lower high major trend reversal. Since the market has inertia, sideways is most likely for at least a few more days.
The EUR/USD daily chart stopped just 4 pips below the November 9 lower high. The bears therefore want a big double top. The bears also want a small double top bear flag with the June 15 top of the sell climax.
The bulls see a pullback from a test of the major resistance of the November 9 major lower high. The momentum up in May was strong. In addition, the weekly chart has been in a trading range for 2 years. Furthermore, legs in trading ranges often go above resistance before reversing Consequently, the odds still favor a break above the November high within a few weeks.
Trading ranges resist change
Yet, the odds are that the 2 year trading range will continue. Hence, the bull breakout will probably just be part of the 6 month bull leg in the 2 year trading range. Therefore the odds are against the start of a bull trend on the daily or weekly charts.
If the bears break strongly below the May 30 bottom of the trading range, then the odds would favor a test down below lower support. That includes the breakout point above the March 31 top of the 5 month trading range.
Since markets have inertia, the odds are that they will continue to do what they have been doing. The daily chart has been going sideways for 5 weeks. It has reversed every couple of days. Therefore, the odds are for at least several more sideways days.
Overnight EUR/USD Forex trading
The EUR/USD chart has been in a 30 pip range for 6 hours. The odds favor at least one more leg down after last week’s strong reversal down from a test of the November 9 major lower high. Yet, the minimum target is only the bottom of the 1st leg down. That is only about 50 pips from here.
In addition, there is still room up to the top of Thursday’s sell climax. That is always a magnet. As is always the case, there are always reasonable arguments for both bulls and bears when a market is in a trading range. The result is that whenever the market goes downs, bulls buy more and the bears take profits. When it goes up, the bears sell more and the bulls take profits. With everyone buying low, selling high, and scalping, trading ranges can last a long time.
Because the moves have been small overnight and the market is in the middle of its 4 week range, day traders will mostly scalp.
The odds favor a test down to the bottom of the 4 week trading range over the next few days. However, the bulls will probably get a bounce there. They will try to create a double bottom bull flag on the daily chart with the May 30 low.