EUR/USD : Small Breakout
Al Brooks | Apr 16, 2021 01:12PM ET
o Small breakout above March 18 high. Bulls need consecutive closes above that high, for traders to look for rally to continue up to next resistance at Feb. 25 lower high.
o More likely will soon begin a pullback for a week or two.
o Rally from March low has been in a tight bull channel, and it has had three legs up. That is a parabolic wedge buy climax, which typically attracts profit takers.
o Parabolic wedge rally to a double top (with March 18 high), so increased chance of a pullback to the bottom of the ii (consecutive inside bars) of Friday/Monday. An ii is often a final bull flag, which makes it a magnet.
o Bears want resumption of four-month bear trend from double top with March 18 high, but any selloff will more likely form higher low.
o Three-week rally has been strong enough, so that bulls will buy a pullback that retraces about half of the rally, and tests the March 9 low.
o Whether or not bulls get successful breakout, EUR/USD has been in a trading range since August. It should continue for at least a month, and probably several months.
Overnight EUR/USD Forex trading on 5-minute chart
o Early selloff to below yesterday’s low, and then nine-hour rally to above yesterday’s high. Today is therefore an outside up day.
o Today’s range has been small, like yesterday’s.
o Breakout above yesterday’s high was so far only by 1 pip above yesterday’s high. Also, only 5-pip breakout above March 18 high.
o Range has been small, but trending up since reversal up from below yesterday’s low.
o Day traders have been mostly buying, but taking quick profits (scalps).
o Trading range for five hours, and day traders have been selling. However, biggest pullback has been only 20 pips. The bears are not yet making money on their shorts. Better to focus on buying until bears begin to make money.
o Despite nine-hour rally, today’s range is small, and EUR/USD in 25-pip range for five hours. Day traders have been scalping.
o They will continue to scalp unless there is a series of strong bull bars breaking above the March 18 high. That is unlikely.
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o They will swing trade shorts if there is a series of big bear bars, which is also unlikely.
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