EUR/USD: Bulls Will Likely Get A Rally On The Daily Chart Lasting Several Months
Al Brooks | Nov 02, 2022 09:25AM ET
On the EUR/USD:
– The bulls are trying to keep the Oct. 18 breakout gap open. At the moment, it is a measuring gap, and the bears need to get a close below the Oct. 18 high for traders to agree that the gap has closed.
– The bears have a four-bar micro channel, increasing the odds of a second leg down.
– There were buy-the-close bulls that bought the Oct. 26 close and likely scaled in lower. While the market will probably test the Oct. 26 close soon and let those traders out break-even, some of those bulls are disappointed enough that they may try and exit break-even on the entire trader on any bounce.
– The bears hope the rally up to Oct. 26 is a large second leg trap in a bear channel. Those bears want a selloff that led to a breakout below the September lows. The selloff will likely lead to buyers below, and the downside will be limited.
– The bulls had a higher low major trend reversal on Oct. 13. However, the channel down was tight. This increases the odds that the market might have to get down to the Oct. 13 low and form a double bottom higher low major trend reversal before the market can go much higher.
– Overall, the bears, have been in a channel since mid-2021, and the odds favor this bear channel is evolving into a trading range. For this to happen, the bulls will likely get a rally on the daily chart lasting several months.
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