The EUR/USD Forex market on the daily chart has been in a strong bull trend and there is room to a measured move target above. Also, the February 2018 high above 1.25 is another magnet.
However, the Small Pullback Bull Trend from the Nov. 4 low has lasted about 50 bars, which is a long time. Traders are wondering if there will be a deeper pullback before the rally continues up to 1.25.
There was a wedge top last week and then a big 2-day selloff to the start of the wedge. The EUR/USD is now testing the top of the wedge. The bears want a 2nd reversal down from a small double top. However, the bulls hope that the 2-day selloff was just a test of support, and that the bull trend is resuming.
With the EUR/USD in a trading range between 1.20 and 1.23, it is in Breakout Mode. Traders believe there is a 50% chance of a successful bull or bear breakout.
Once there is a successful breakout, they will look for a 300-pip measured move. For the bulls, that would be far above their 1.25 target. For the bears, a 300-pip selloff would be a test of the bottom of the August/October trading range.
I have been saying that Forex markets often make big moves in early January. That may happen here. But until there is a breakout, traders will bet on reversals. They are buying low, selling high, and taking profits every few days.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market rallied a little early in the overnight session, but has been in a 30-pip trading range since then. Day traders are scalping. Today so far is a small inside day, which is neutral. I have been saying that financial markets might be waiting for the results of the Georgia senate races. Those results might not come until the end of the week.
While a breakout can come at any time, markets have inertia. They tend to continue to do what they have been doing. Day traders will continue to scalp until there is a breakout.