EUR/USD Waiting For Yellen Tomorrow
Al Brooks | Aug 25, 2016 09:41AM ET
The 60 minute chart reversed up overnight from a big 2 legged correction. Yet, the reversal has been weak. Therefore, today will probably have mostly trading range price action.
While the EUR/USD 60 minute Forex chart sold off yesterday, it stabilized at the bottom of the 6 day trading range. Furthermore, that is just above the August 2 breakout point. However, the 2 day selloff was in a tight bear channel. Hence, a trading range is more likely than a strong reversal back up.
Because the daily chart has been in a trading range for 6 months, the selloff will probably have to dip below that 1.1233 August 2 high. In trading ranges, Markets usually have to dip below support before they can reverse up. This means that many bulls will hesitate to buy until after that test below 1.1233. If there is a strong bull breakout, they will buy. Yet, that is a low probability event. Most will wait for a reversal up after testing below support.
h3 EUR/USD overnight Forex sessions/h3For the past 7 days, I have been writing that the daily chart would be sideways, and it has been. The 60 minute chart has had 2 big legs down from the August 18 high. This is a bull flag. Furthermore, it is trying to reverse up from the bottom of the 7 day range. Yet, the reversal up so far lacks consecutive big bull trend bars. It therefore is more likely just another leg in the 7 day range. Traders might be waiting to hear from Yellen tomorrow. Because there is a 40% chance that the top for the next month in the stock market formed on Tuesday, the news tomorrow could lead to a big move up or down in all financial markets.
Since the overnight trading has been unremarkable and there is news tomorrow, today will probably be another trading range day.
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