The EUR/USD daily Forex market has 2 doji bars in the middle of a 3 month trading range. The bulls and bears are perfectly balanced.
After a strong bull trend in 2017, the EUR/USD daily Forex chart has been in a trading range in 2017. It has had several strong legs up or down, and there is no evidence that it is about to break out. Since the weekly chart is in a bull trend and there is a bear trend line just above, the odds favor a bull breakout.
However, that monthly bear trend line is resistance. Resistance is a magnet. Like all magnets, its pull is stronger when the market gets close. At the moment, it is likely that there will be a bull breakout within a couple of months.
Yet, the bull trend on the weekly chart has been weaker for 6 months. The current 8 week trading range might therefore be the final bull flag in the trend. That means there is an increased chance of a bull breakout failing. A reversal down from the monthly bear trend line would create a wedge bear flag on the monthly chart.
The bears prefer a bear breakout below the 3 month range without a bull breakout coming first. Their target is a measured move down based on the 400 pip tall height of the range. That would be around 1.17. That is the middle of the November range. If the EUR/USD got there, it would probably get to the 1.15 bottom of that range. It would then be testing the top of the 2015 – 2016 trading range.
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart has been in a 60 pip range for 2 days. In addition, it is in the middle of last week’s 300 pip rally. While it has sold off 60 pips overnight, it is still above Friday’s low. Friday was a doji bar on the daily chart in the middle of a trading range. It is therefore neutral. The odds are that beats will not get a strong break below Friday’s low. Consequently, there is probably not much left to the overnight selloff. Traders will begin to switch to scalping.
The overnight bear channel was tight. Tight bear channel usually do not reverse into bull trends without 1st going sideways for 20 or more bars. As a result, the upside is small for at least a couple of hours. Since Friday was a doji and today is overlapping most of it, there is an increased chance of another doji. Therefore today’s open of 1.2311 will be a magnet all day.