EUR/USD 200 Pip Range For Several Weeks
Al Brooks | Jun 28, 2017 09:17AM ET
Yesterday was a big bull trend bar on the daily EUR/USD Forex chart. Furthermore, it broke far above the strong resistance of the November 9 high. However, today so far is a doji bar. This is therefore bad follow-through. Hence, it increases the chances that the breakout will fail.
Yesterday closed far enough above the November 9 lower high to be a strong bull breakout. Yet, the EUR/USD market is still in a 2 year trading range. While I have been saying for several weeks that the odds favored the breakout, I also said that the breakout would still be only a bull leg in the 2 year trading range. In addition, I have been saying that the breakout would fail. What no one knows is if the breakout will fail immediately or after several more weeks and 200 more pips.
The EUR/USD Forex market is in a bear trend on the monthly chart. It has been in a trading range for 2 years. There have been more than 10 attempts to break above 1.1400 and each has failed. Will this one succeed? Probably not. When a market is in a trading range, it often tries to break into a trend. And eventually it always does. However, 80% of strong attempts fail. Therefore, the odds are that this one will fail as well. Hence, the trading range of the past 3 weeks will probably be the final bull flag in the 6 month rally. The daily chart will therefore likely soon go sideways to down for at least a couple months.
Because there is no clear top yet, and a couple of the rallies in the past 2 years have gone above 1.1500, this rally might continue for a few more weeks. In addition, it might go up for even 200 more pips. Yet, the odds are that it will not go higher or last longer.
While it is possible that the daily chart could reverse down sharply, the 6 month bull trend has been in a tight channel. Consequently, the bulls will probably buy 200 pip pullbacks for a couple of months. Therefore, the daily chart will probably soon enter a 200 pip trading range that will last at least a couple of months
h3 Overnight EUR/USD Forex trading/h3
The 5 minute chart sold off 900 pips within the past hour and then bounce 50 pips. Big Down, Big Up means Big Confusion, which means a trading range is likely for a few days. Therefore day traders will mostly scalp. They know that 1.1400 is resistance and they will therefore look to sell around there.
They also know that yesterday’s breakout was strong. Hence, they will look to buy 100 – 200 pip selloff, like they just did. Finally, they know that the EUR/USD market will probably have a hard time going far up or down over the next week or so. They therefore are taking quick profits.
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