The EUR/USD forex market on the daily chart has been in a triangle for a couple weeks, and that triangle is within a 2-month trading range. This is Breakout Mode.
The bulls hope that the trading range is a bull flag. They want a breakout above, and then a rally to above the February 2018 high of 1.2555.
However, the bears want a lower high, and then a breakout below. They would look for a measured move down to the Nov. 4 low at 1.16. The Jan.22 lower high had a bull body, which is a weak sell signal bar, and the 2-day selloff has been weak. This is not yet a credible lower high major trend reversal (here, it would also be the right shoulder of a head and shoulders top).
The EUR/USD is still balanced. There is a 50% chance that the successful breakout will be up, and a 50% chance it will be down. Until there are consecutive closes above or below the range, traders will continue to look for reversals.
Overnight EUR.USD Forex trading
The 5-minute chart of the EUR.USD forex market sold off overnight to below yesterday’s low, but then reversed up to above the open. Both the selloff and rally were unimpressive. They look like legs in a trading range day. Day traders have only been buying since the reversal up. The bulls want today to go above yesterday’s high. It would then be an outside up day, which would increase the chance of higher prices tomorrow.
The rally had an initial spike, but has been in a wedge bull channel for several hours. A wedge rally usually transitions into a trading range.
If that happens today, day traders will begin to sell reversals down for scalps. A reversal back down to the low is unlikely. Consequently, bull day traders will continue to buy all day. But if the day evolves into a trading range, which it probably will, the bulls will wait to buy pullbacks instead of buying breakouts.