EUR/USD Should Test Down This Week
Al Brooks | Jun 19, 2017 09:12AM ET
The 240 minute EUR/USD chart is still in a trading range. The bulls see a 5 week bull flag. The bears see a wedge top and now a lower high major trend reversal. Since the market has inertia, sideways is most likely for at least a few more days.
The EUR/USD daily chart stopped just 4 pips below the November 9 lower high. The bears therefore want a big double top. The bears also want a small double top bear flag with the June 15 top of the sell climax.
The bulls see a pullback from a test of the major resistance of the November 9 major lower high. The momentum up in May was strong. In addition, the weekly chart has been in a trading range for 2 years. Furthermore, legs in trading ranges often go above resistance before reversing Consequently, the odds still favor a break above the November high within a few weeks.
h3 Trading ranges resist change/h3Yet, the odds are that the 2 year trading range will continue. Hence, the bull breakout will probably just be part of the 6 month bull leg in the 2 year trading range. Therefore the odds are against the start of a bull trend on the daily or weekly charts.
If the bears break strongly below the May 30 bottom of the trading range, then the odds would favor a test down below lower support. That includes the breakout point above the March 31 top of the 5 month trading range.
Since markets have inertia, the odds are that they will continue to do what they have been doing. The daily chart has been going sideways for 5 weeks. It has reversed every couple of days. Therefore, the odds are for at least several more sideways days.
h3 Overnight EUR/USD Forex trading/h3
The EUR/USD chart has been in a 30 pip range for 6 hours. The odds favor at least one more leg down after last week’s strong reversal down from a test of the November 9 major lower high. Yet, the minimum target is only the bottom of the 1st leg down. That is only about 50 pips from here.
In addition, there is still room up to the top of Thursday’s sell climax. That is always a magnet. As is always the case, there are always reasonable arguments for both bulls and bears when a market is in a trading range. The result is that whenever the market goes downs, bulls buy more and the bears take profits. When it goes up, the bears sell more and the bulls take profits. With everyone buying low, selling high, and scalping, trading ranges can last a long time.
Get The News You Want
Because the moves have been small overnight and the market is in the middle of its 4 week range, day traders will mostly scalp.
The odds favor a test down to the bottom of the 4 week trading range over the next few days. However, the bulls will probably get a bounce there. They will try to create a double bottom bull flag on the daily chart with the May 30 low.
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.