The EUR/USD 240 minute Forex chart broke below the bull trend line. Since there was a wedge top, traders should expect 2 legs sideways to down. Furthermore, a 2 week trading range is likely. The bulls see a double bottom bull flag and want a break above the November 9 high.
The daily chart had a strong breakout 2 weeks ago, but has hesitated twice since. The bulls want the momentum to carry the market above the November 9 lower high at 1.1412. Yet, the rally is probably too strong. Hence, the stops for the bulls are far below. Therefore, many are taking partial profits. As a result, there have been 2 big bear bars in the past 4 days.
Since this profit taking is far below the November high, the odds are that the chart will form a trading range here. In addition, it will probably last a couple of weeks.
Overnight EUR/USD Forex trading
Yesterday’s selloff broke below the bull trend line on the 240 minute chart. Since the channel was a wedge, 2 legs sideways to down are likely.
The bulls bought yesterday’s low. Therefore, the selloff since yesterday might be the 1st leg down. Yet, if the EUR/USD 240 minute chart turns down again from a lower high, the 2nd leg down will probably test the May 18 bottom of the wedge around 1.1100.
The odds are that it would then bounce and form a trading range for a couple weeks. If so, the chart would be in breakout mode. But, the November high is a strong magnet. Furthermore, the momentum up is strong. Hence, even in Breakout Mode, the odds would still favor the bulls. The trading range on the 240 minute chart would therefore simply be a bull flag on the daily chart.
Because the current 1st leg down on the 240 minute chart is hesitating at Monday’s low, the bulls are hoping it will reverse up from a double bottom with that low. In addition, yesterday’s high is the neck line of that double bottom bull flag. A measured up above would almost reach the target of the November 9 high.
Since the bulls and bears now have reasonable setups on the 240 minute chart, the chart will probably enter a trading range for a couple of weeks. Therefore, day traders should expect to mostly scalp.