The EUR/USD daily Forex chart had a High 2 bull flag yesterday, but today reversed yesterday’s bull body. It is in the middle of a 3 month trading range with no sign of a breakout.
The EUR/USD daily Forex chart is at the apex of a triangle in the middle of a 3 month trading range. I have said for a week that it would probably go sideways ahead of tomorrow’s 11 a.m. FOMC announcement. Nothing is different. While today so far has reversed yesterday’s rally, the odds are against a big move from here until tomorrow’s announcement.
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart sold off 70 pips over the past 4 hours. It therefore reversed most of yesterday’s rally. However, not all. It is still above yesterday’s low and below yesterday’s high, and therefore today is an inside day. Even if it trades below yesterday’s low today, the 3 day tight trading range would probably prevent it from trading much below.
The momentum down is good for the bears. Traders are selling and holding for a swing down to yesterday’s low, which is 25 pips below. The selloff will probably find support there. If so, the bears will start to sell rallies instead of at the market. The 1st reversal up will probably be minor. Hence, traders will sell the 1st 20 – 40 pip rally today.
Over the next 2 hours, the bears will probably begin to take profits at new lows. In addition, the bulls will look for a buy setup for a 20 – 30 pip bounce.
The 4 hour selloff has been strong. A bear trend only rarely reverses into a bull trend without first evolving into at least a 2 hour trading range. Consequently, the odds are that the 5 minute chart will begin to go sideways within the next 2 hours. Since all financial markets will probably be quiet ahead of tomorrow’s FOMC announcement, today’s strong selloff will probably lead to a trading range for the rest of the day.