EUR/USD Stalls at the 2017 Low
Al Brooks | Nov 29, 2022 09:23AM ET
- The EUR/USD is continuing to stall at the 2017 low. While the bulls had a strong breakout with follow-through on November 10 and 11, the market has been sideways for 12 bars after the breakout.
- This increases the odds of the market being much closer to neutral and the bulls only having a slight advantage in probability. If the bulls were mighty, the market would be racing to a higher price and not going sideways.
- Bears see the November 10 and 11 bull breakouts as a vacuum test of the 2017 low. These bears try their best to convince traders that they are in control. They can do this by causing the market sideways and developing more bear closes.
- Bears see yesterday as a double top with November 15. Yesterday was also an outside down bar, which increases the odds of the market going sideways. Outside bars typically act more like trading range bars than trend bars.
- Even if the bears get a downside breakout, bulls will buy it after a couple of legs down, betting on continued trading range price action. The daily chart has been in a bear channel for over a year and a half. Bear channels typically convert into trading ranges, which has happened over the past two months. This means the odds favor higher prices and test previous lower highs in the bear channel.
- Overall, traders should expect the market to continue sideways to up. However, if the bulls do not get an upside breakout soon, the likelihood of a downside breakout that tests the November 10th low will increase.
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