The EUR/USD daily Forex chart broke above Friday’s high. Thursday was a 1 day pullback from a 4 day rally. Since the chart is in the middle of a triangle, it is in breakout mode.
The EUR/USD daily Forex chart resumed up overnight after last week’s 4 day rally. The momentum favors a test of last week’s high. Yet, it is not yet strong enough for traders to believe that the weekly bull trend is resuming.
While the probability still is slightly greater for a bull breakout of the 3 month triangle, until there is a breakout, there is no breakout. Furthermore, the 1st breakout of a triangle has a 50% chance of reversing.
The bulls want to see consecutive big bull bars breaking above the March 27 high. However, the bears want a strong break below the April 6 low. Until one side wins, traders will continue to hold onto trades for only a few days.
The EUR/USD 5 minute Forex chart has been in a 20 pip range for 5 hours. Most day traders will wait for the range to become 30 pips before trading again. The bulls had a 40 pip rally early in the European session. Yet, the market went sideways since.
Last week’s momentum up was strong enough so that the bulls will probably test last week’s high around 1.24 today or tomorrow. But, that is only 27 pips above the overnight high and therefore not much of a goal.
If the bulls break above that high today or tomorrow, they then will try to break above the March 27 major lower high of 1.2476. However, if the rally fails just above 1.24, the bears will have a 2 week wedge lower high that began on April 2.
Consequently, while the moves have been getting very small over the past 3 weeks, the odds favor an attempt at a breakout of the 3 month triangle within 2 weeks. Day traders will be ready either for a 200+ pip rally to the February 16 top of the range, or a 200 pip selloff to below the April 6 low.
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