EUR/USD: Breakout Mode
Al Brooks | Jul 28, 2021 09:56AM ET
Three consecutive bull bars for EUR/USD after consecutive wedge bottoms. This increases the chance that a reversal up over the next couple of weeks has begun.
The bulls need to break strongly above the 20-day EMA to convince traders that the July low will hold through August and that the rally can reach the June 25 lower high.
Yesterday was only a doji bar and the rally stalled at the 20-day EMA and the top of the 2-week tight trading range.
The daily chart is in Breakout Mode. The bulls want a rally to the June 25 high.
The bears want a breakout below the March and November lows at the bottom of the yearlong trading range.
This week broke above last week’s high on the weekly chart. There is now a higher low double bottom with the March low.
However, there have been 9 consecutive weeks on the weekly chart where every high has been below the high of the prior bar. That bear micro channel is a sign of relentless selling.
Consequently, the rally on the daily chart will probably not continue up for more than a few weeks. If it reaches the June 25 high, there will likely be about a 50% retracement from there.
There is an FOMC announcement today at 11 am PT. It can affect all financial markets. Therefore, EURUSD day traders should exit positions ahead of the announcement.
Furthermore, there is often a big move in both directions immediately after the report. Consequently, day traders should wait at least 10 minutes after the report before resuming trading.
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