EUR/USD: Bulls Looking For Disappointment Bar Today
Al Brooks | May 13, 2022 09:26AM ET
- Yesterday, the EUR/USD closed as a strong bear bar closing near its low. Bears want follow through today, the bulls want a bull reversal bar.
- Yesterday is a surprise bar, and the odds favor a small second leg down. The problem the bears have is this bar is likely to be an exhaustion bar and the second leg down from the April 21 six-bar selloff.
- The market formed a 10-bar tight trading range right before yesterday’s bear breakout. Traders are wondering if the market will reverse back into the tight trading range from the past two weeks and form a final flag.
- Ultimately, the market will likely have to get back to the March – April trading range lows.
- The 2017 low is only around 50 pips away (1.0339), so the market may not be able to escape the gravitational pull of the 2017 price level. This means that this could be a sell vacuum test of the 2017 low, and the market may have to reach it in the next couple of trading days.
- Today is Friday, so weekly support and resistance is important.
- Bears want today to close near its low, increasing the odds of lower prices. The low of the week is 1.0354, so it is not far from the current price.
- Bulls want to create a strong rally today and try to close the market as close to last week’s low (1.0482) as possible. This week’s midpoint is also a target for the bulls (it would disappoint bears if it closed there). However, it is near the same price as last week’s low.
- Bulls will probably not be able to reach last week’s low since it is so far away. The best the bulls can hope for is to create as big of a tail as possible.
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