EUR/USD: Double Bottom Higher Low Major Trend Reversal
Al Brooks | Dec 18, 2018 11:11PM ET
The EUR/USD daily Forex chart triggered a buy signal today by going above yesterday’s high. There is a double bottom higher low major trend reversal. However, the chart is still in a trading range and therefore neutral.
The EUR/USD daily Forex chart has been in a tight trading range for 8 weeks. It therefore has both buy and sell signals. Yesterday was a good buy signal bar for a double bottom higher low major trend reversal. This is a credible buy setup. However, the probability of a swing up is only 40%. Traders wanting higher probability will wait for a strong breakout above the December 12 lower high of 1.1444.
The bears want this breakout to reverse, like all of the other breakouts up and down for the past 2 months. They then want a breakout below the double bottom and then the November low.
Tomorrow’s FOMC announcement is a potential catalyst for a big move up or down. Furthermore, currencies sometimes begin moves around the 1st of the year that last for months. Consequently, traders should be ready to switch from trading range trading to trend trading within the next few weeks.
h3 Overnight EUR/USD Forex trading/h3
The EUR/USD 5 minute Forex chart rallied 70 pips overnight in a tight bull channel. It broke above yesterday’s high and triggered a buy signal on the daily chart.
However, it then sold off 30 pips in a tight bear channel. That creates a Big Up, Big Down move, which means Big Confusion. A strong minor reversal usually leads to a trading range. The odds are that there will be a test of the overnight high today.
But, the bars are small and most overlap several other bars. This is not how a strong breakout typically looks. Therefore, while the daily chart triggered a buy signal, the 5 minute chart will probably be in a range today. Traders might be waiting for tomorrow’s FOMC announcement.
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.