EUR/USD: Bulls Defending October 18 Breakout Point
Al Brooks | Nov 01, 2022 09:35AM ET
- The EUR/USD is testing the October 18 breakout point, and so far, the gap (blue line) is still open which is good for the bulls.
- The bulls see the past few bear bars as a pullback from the October 26 breakout bar.
- Bears see two legs up (October 4, October 26) and a double top. They want break below the September 28 low (neckline) and a measured move down. The problem with this argument is that the bull bars appear to be strong and closing on their highs which is a sign of strong buying pressure.
- The other issue for the bears is that the market has been in a bear channel on the daily chart since mid-2021. Channels usually evolve into trading ranges which means the odds favor a rally lasting several months so that the market cycle can evolve into a trading range.
- The market is also at the 1.0000 big round number, which is logical support to begin this process of evolving into a large trading range on the daily chart.
- Overall, traders should expect sideways to up over the next few months. Traders should expect a test of the October 26 close in the next few days or weeks as it was a reasonable buy the close bar, and it should let bulls out if they are willing to scale in lower.
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