EUR/USD: Second Short Entry, Tight Trading Range
Al Brooks | Jun 23, 2022 09:29AM ET
- The EUR/USD has been going sideways since late April.
- Bulls have a head and shoulders bottom (left shoulder April 28, head May 13, right shoulder June 15). Note a head and shoulders bottom is always a higher low major trend reversal.
- Bears have a possible second entry short setup assuming today closes near its low and tomorrow triggers the sell.
- Bears want trend resumption back down and a second leg down following the three-bar bear breakout ending on June 13.
- The market has been in a trading range for two months, and the most important thing to remember is that the probability of a successful breakout up or down is very close to neutral. If one side had a big advantage, the market would not be going sideways.
- While the odds favor a test of the April 21 high, the market may have to fall below the 2017 low (blue line) before the market can rally up to the April 21 high. The market came within 15 pips of the 2017 low back on May 13, and while that might be enough to satisfy a test, it is such an important price level that the market may have to fall below it.
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