The 240 minute EUR/USD chart has been sideways for 3 weeks after a wedge top. It therefore has both reasonable buy and sell setups and is in breakout mode.
The EUR/USD 240 minute chart turned down from a wedge top last week. However, the 3 day rally retraced about 50% of the selloff. The wedge has evolved into a trading range, as expected. Since a trading range is neutral, the probability no longer favors the bulls. The chart is in breakout mode before Wednesday’s FOMC interest rate announcement. This means that traders are looking for a measured move up or down from the 3 week, 300 pip tall trading range.
Since the EUR/USD monthly chart is at the resistance of the bottom of a 12 year trading range, the odds of a measured move up without a pullback on the monthly chart are only 40%. Consequently, if the bulls get a breakout above the high of 2 weeks ago, it will probably quickly fail.
The bears have a 60% chance of a test down to the August 17 low. This would be about a measured move down from the 3 week trading range. Furthermore, it is the beginning of the wedge, which is support and therefore a magnet.
Overnight EUR/USD Forex trading
The 5 minute EUR/USD chart has been in a 30 pip range for 4 hours. In addition, it is in the middle of a 3 week, 300 pip range. Finally, it is trying to be neutral going into Wednesday’s FOMC announcement. Consequently, the odds are against a big move up or down today. Therefore, day traders will be mostly looking for scalps. If there is a surprise strong breakout up or down, they will swing trade. However, the odds favor quiet trading into the report.