EUR/USD Forex Double Bottom And Micro Double Bottom
Al Brooks | Oct 23, 2018 09:00AM ET
The EUR/USD daily Forex chart still has a double bottom with the October 9 low. It is now trying to create a micro double bottom with Friday’s low.
The 6 day selloff from the October 16 lower high will probably form a higher low. The bulls are looking for a bottom. I said that they would probably need a micro double bottom because last week had 2 big bear days. If today closes near its high and has a average size body, today would be a credible buy signal bar on the daily chart. There would be a double bottom with the October 9 low and a micro double bottom with Friday’s low.
Alternatively, if today only has a small bull body or a bear body, then the daily chart will probably fall below last week’s low. If it does, the bear breakout will probably last only 1 – 3 days. A reversal up at that point would create a wedge higher low major trend reversal. The 1st 2 points in the wedge are the September 10 and the October 9 lows.
Until there is a strong reversal up, the bears still have a 40% chance of a break below the August 15 low. But, the month long selloff might get almost all of the way down to that low before the bulls take control.
Even when the bulls get their rally, it will probably only last a few weeks. This is because the daily chart is in a 6 month trading range. Every leg up or down, no matter how strong, has reversed within a few weeks.
h3 Overnight EURUSD Forex trading/h3
The EURUSD 5 minute Forex chart reversed up 50 pips overnight. However, the rally has had deep pullbacks and many big bear bars. This is not how a swing up on the daily chart typically begins. Day traders are still taking quick profits on longs and they are selling rallies. This usually results in a trading range day.
Because of the possible bottom on the daily chart, there is an increased chance of a trend day up or down. At the moment, the odds favor a continuation of the overnight trading range price action.
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