EUR/USD: Despite Bull Trend, Many Will Take Some Profits Soon
Al Brooks | Aug 05, 2020 10:09AM ET
The EUR/USD on the daily chart has rallied for 2 days from a High 1 bull flag buy signal bar. However, there was a strong sell signal bar last week and there is an extreme buy climax. Also, this is taking place at the resistance of the September 2018 high. Therefore, despite the strong bull trend, many bulls will take some profits soon.
If enough do, the EUR/USD will pull back for a couple weeks to around the EMA and the March 9 high. While yesterday and today so far are good for the bulls, traders should expect that either the pullback began last week or it will begin after a brief new high, like on June 10.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market rallied overnight and it is testing last week’s high. However, the rally has had 3 legs up in an bull channel. It is therefore a wedge, which is a type of buy climax.
Buy climaxes usually attract profit takers. While the bulls want the rally to continue to above last week’s high today, the wedge bull channel will probably evolve into a trading range within a couple hours.
So far, day traders have mostly only been buying for 20 pip scalps and a swing up. However, they will begin to sell reversals down from the intraday high for 10 – 20 pip scalps.
Can today continue up all day? Probably not because the range is already about average and last week’s high is resistance. Therefore either sideways trading or even a reversal down is more likely.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.