EUR/USD: Profit Taking Likely
Al Brooks | Sep 27, 2022 09:32AM ET
- EUR/USD bears have a five-bar bear micro channel, increasing the odds that the first reversal up will fail.
- The problem the bears have is that this selloff is probably exhaustive, so any second leg down will probably be limited.
- So, if the upside is limited due to the five consecutive bear bars, and the downside is likely limited due to possible exhaustion, sideways here is most likely.
- Bulls want to form at least a micro double bottom and get a rally to disappoint the bears.
- Bears want to prevent the bulls from developing buying pressure.
- Look at every big selloff over the past five months and notice how each one had at least a 50% pullback. The current selloff will likely have at least a 50% pullback.
- Although the market may rally soon, it is essential to recognize that the market is in a broad bear channel, which typically evolves into a trading range before it becomes a bull trend. The upside is probably limited to around the September high or lower.
- Overall, traders will pay close attention to the bulls’ resolve today. Traders want to see if the bulls are strong enough to get a bull trend bar closing on its high, which would disappoint sell the close bears. If the bulls can get a good bull close today, this might entice bears to buy back shorts around the low, betting on a bounce.
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