EUR/USD: Possible Deep Pullback Before Rallying Again
Al Brooks | Jun 01, 2022 09:27AM ET
- Yesterday was the final trading day of the month. EUR/USD bulls have a bull bar closing on its high for the monthly chart, which increases the odds that the market will have to go above it soon.
- This means the market will likely have to go above the May 31 high regardless of if the market has a 50% pullback of the May 13 to May 31 rally first.
- I have stated in the last report that the market may have to have a selloff and form a higher low major trend reversal before going much higher. The reason for that is, as strong as the current rally looks, there are a lot of bear bars which increase the odds of a pullback soon.
- The channel up to May 31 is tight, and it is a small pullback bull trend. The May 25 low and May 19 high may be a measuring gap that projects the market up to the April 21 high.
- The market is also at the 2-month trading range low (April 14), which is a logical resistance level to have a pullback.
- Over the next couple of days, the market will decide between triggering the monthly chart buy signal by going above the May 31 high or having a pullback first, which would form a high low major trend reversal and trigger the May 31 high. Most traders would prefer the market to have a pullback and create a higher low before going above May 31.
- One final note is if the market does get a pullback before triggering the May 31 high, it is possible that the market has to test last month’s bear close (1.0547). There are disappointed bears who sold the previous month’s close, and if the market tests back to their entry price (1.0547), they would be happy to buy back shorts at breakeven or with a small loss.
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.