EUR/USD 100 Pips Bounce
Al Brooks | Oct 18, 2017 09:50AM ET
The EUR/USD daily Forex chart sold off for 4 days after last week’s strong 2 day bull breakout. This is probably a pullback from that breakout. The odds favor a 2nd leg up.
The EUR/USD Forex chart has been in a trading range for 3 months. While there is a lower high major trend reversal (head and shoulders top), most reversals fail. Therefore the odds favor at least a couple more weeks within the range.
The bulls have a double bottom with the August 17 low and a small wedge bottom from 2 weeks ago. The past 4 days are a pullback from the 2 day reversal up from those bottoms. The reversal was strong enough to make at least a small 2nd leg up likely. The minimum target is the October 12 lower high.
The bears want the 4 day pullback to accelerate and become a bear breakout below the 3 week small double top. They then need a strong breakout below the 3 month range. Since most breakouts fail, the trading range is more likely to continue.
h3 Overnight EUR/USD Forex trading/h3
The 5 minute chart reversed up 35 pips over the past 4 hours. While the 4 day pullback retraced more than 50% of last week’s rally, the odds still favor a test of last week’s high, which is more than 100 pips above. Bulls will buy pullbacks, but they will take profits near last week’s high. Bears will sell there for 50 – 100 pips down. The 4 week trading range within the 3 month trading range will probably continue until the weekly chart gets closer to its 20 week exponential moving average. This means that any move up or down on the 5 minute chart over the next 2 weeks will probably not be more than 200 pips.
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