EUR/USD Rally To 1.1350
Al Brooks | Jun 22, 2016 11:51PM ET
The 60 minute EUR/USD forex chart is having a bull breakout above a wedge bear flag after rallying up from a wedge bull flag.
Just as I wrote about the Emini above, the forex markets are in breakout mode. Consequently, traders will mostly scalp while they wait for the Brexit announcement. It will probably come on Thursday or Friday.
If there is a strong breakout up or down today, day traders will swing trade. More likely, the range will be small and they will mostly scalp. The EUR/USD 5 minute forex chart has rallied 70 pips overnight in a broad bull channel. It had 3 pushes up and is therefore a wedge bear flag.
However, the in the past 20 minutes, it has been breaking above the wedge top and back above the June 21 low of 1.1301. The breakout is strong enough so that at least a small 2nd leg up is likely. Hence, bulls will buy the 1st reversal down. The next resistance is the June 21 lower high of 1.1349. That might be too far for the current rally, which is not especially strong.
When there is a bull breakout above a wedge bear flag, there is a 50% chance of a swing up. It often reaches a measured move. There is also a 50% chance that the breakout will soon fail. As a result, the breakout can be a bull trap. It therefore has a 50% chance of being a top.
Since at least a small 2nd leg up is likely, the best the bears can probably get over the next hour is a trading range. The bulls are hoping for a breakout above the June 21 high. If this rally gets there today, it is more likely to stall at that resistance and enter a trading range.
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