EUR/USD: Odds Favor Bulls Today, But...
Al Brooks | Aug 12, 2020 10:14AM ET
The EUR/USD on the daily chart has been going sideways for 3 weeks at major resistance. Every trading range has both a reasonable buy and sell signal. This one has a double top and a double bottom bull flag.
A trading range is a Breakout Mode pattern. That means there is a 50% chance of a breakout and measured move in either direction. Furthermore, there is a 50% chance that the 1st breakout in either direction will fail.
If there is a successful bear breakout, traders will look to buy a pullback to support. That is around the June 10 breakout point or the June 19 higher low.
If there is a successful bull breakout, the rally will probably reverse after a week or two and begin a pullback to test the June 10 high. This is because a trading range in a buy climax is typically the Final Bull Flag. Traders expect the breakout to be brief and reverse down at least to the bottom of the flag.
h3 Overnight EUR/USD Forex trading/h3The 5 minute chart of the EUR/USD Forex market sold off to below yesterday’s low and then reversed up. The day’s range so far is small and the rally has not been especially strong. But it is coming from the bottom of a 3 week trading range. When a market is in a trading range, traders like to buy.
So far, day traders are mostly buying. Once the rally evolves into a trading range, some will look to sell reversals down for scalps.
The bulls want a reliable buy signal bar on the daily chart. They will, therefore, try to get today to close near its high.
The bears want the opposite. But after a reversal up from the bottom of a 3 week trading range in a bull trend, the best they will probably be able to get today is a close in the middle of the range. The odds favor the bulls today.
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