The EUR/USD market on the daily chart has been sideways for a month. This is a Breakout Mode pattern. Traders look for either a measured move up or down. Every trading range has both a buy and sell setup. The bears have a wedge top and the bulls have a higher low after a double bottom.
Yesterday was an inside day after an outside day. That is an ioi Breakout Mode pattern and it is within the 4 week bigger Breakout Mode pattern. So far, today is a 2nd inside day. This is an ii, which is a Breakout Mode pattern. The ioi has now grown into an ioii (inside-outside-inside-inside)
When there is a Breakout Mode pattern, there is a 50% chance of a successful breakout up or down. Furthermore, there is a 50% chance that the 1st breakout up or down will fail. Until there is a clear breakout, traders bet on reversals every day or two and take quick profits.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market so far today is forming a 2nd consecutive inside day. Day traders are scalping reversals for 10 pips.
Today’s range is small and the daily chart is at the apex of a Breakout Mode pattern. Day traders will continue to scalp until there is a breakout up or down. They will then swing trade.
When a market is very tight like this, there is an increased chance of a strong breakout coming at any time. While waiting, day traders scalp.