Yesterday was a big bar with big tail above and below for EUR/USD. It was a trading range bar. It increases the chance of a trading range over the next couple of weeks. Trading ranges often have both double tops and double bottoms. A test of the Nov. 24 low and a bounce would create a double bottom.
Tuesday had a bull body and it followed a reversal up from a parabolic wedge and a failed breakout below the bear channel on the weekly chart. It will probably trade sideways to up for at least a couple weeks. But sideways means that it might test last week’s low before going up.
There is an increased chance that today will remain an inside day. It would then be both a buy and sell signal bar.
The bears hope that yesterday formed a double top bear flag with the Nov. 18 high. They hope today to close near its low so that it would be a higher probability sell signal bar. They want an outside down bar on the weekly chart and a resumption of the bear trend. They are hoping that the 2021 bear trend falls below the last year’s low and the bottom of the 7-year trading range.
Since the monthly chart has been in a trading range for 7 years, it is more likely that the EUR/USD pair will enter a trading range lasting a couple months before it breaks to a new low, if it breaks to a new low. Last week might be the start of the trading range.
Bulls want today to close near its high. They hope that last week’s reversal up is the start of a Small Pullback bull trend that will continue to the Nov. 9 high, which is the top of the most recent sell climax. The probability will be greater if today closes near its high.
The context on the daily and weekly charts still favors sideways to up trading for at least a couple weeks. There might be more buyers than sellers below last week’s low. If the bulls start to get a series of bull bars, traders will begin to look for a trading range that could last a couple months.
