The EUR/USD on the daily chart is forming a micro double top at the resistance of the September 2018 high. It is coming in a nested wedge buy climax.
This should attract profit taking and some shorting. Traders should expect a couple week pullback to around the EMA. It should also test the breakout point of the March 9 high. There is a 30% chance that it could last longer and fall down to the June 9 low.
The bulls hope that the pullback lasts only a few days. The rally from the June 19 low has been a Small Pullback Bull Trend. Every pullback ended after only 1 or 2 days. While that is possible again here, the pattern and the context make a deeper pullback more likely this time.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market broke above last week’s high overnight and then reversed down. The bulls do not want a bear day closing on its low today because that would attract selling and increase the chance of a pullback. They want the trend to continue up indefinitely. Consequently, they will buy selloffs today. They would like today to close above the open so that today would have a bull body on the daily chart. That would increases the chance of another leg up to 1.20 before there is profit taking.
The bears want the EUR/USD to go down to support on the daily chart. They will sell rallies and try to get today to close on its low. If they are successful, traders would expect lower prices for at least a couple days and possibly a couple weeks.
What is most likely? While the EUR/USD has reversed down from above last week’s high, the selloff has not been particularly strong. It has traded sideways for a few hours around yesterday’s close. This increases the chance that today will continue sideways and either close around the open or near the low, but not far below the current low.
Can today reverse back up to above yesterday’s high? That is unlikely after already reversing down.
Can it break strongly to the downside and become a huge bear day? With it sideways for 5 hours, that also is unlikely. Day traders have been scalping for 5 hours and will continue to scalp unless there is a surprise breakout up or down.