EUR/USD Testing Bottom Of Trading Range
Al Brooks | Nov 09, 2018 12:32PM ET
The EUR/USD daily chart has sold off for 3 days from a wedge bear flag at the 20-day EMA. The bulls need a higher low, which would create a double bottom pullback buy setup.
The EUR/USD daily Forex chart has sold off for 3 days from a bear flag at resistance. They want the selloff to break strongly below the August/October double bottom. The August low is also the neckline of the 500 pip tall July/September double top. A measured move down would be 1.08 over the next several months.
However, the daily chart has been in a trading range for 6 months. Trading ranges resist breaking out. Consequently, if the bears get their breakout, it will probably fail within a few days. There is support around 1.12. A reversal there would be from a wedge bull flag on the weekly chart, using the November and August lows. But, if the bears get a series of bear bars closing on their lows, the breakout would then likely fall at least 200 more pips. Traders would then start thinking that 1.08 was possible.
h3 Overnight EUR/USD Trading/h3
The EUR/USD 5-minute chart has been in a 30-pip range overnight after yesterday’s selloff. If the bulls can rally today, it would then be a buy signal day for Monday. The pattern would be a double bottom pullback.
Alternatively, if the bears can get today to close below last week’s low, this week would be an outside down week. This would create a sell signal bar on the weekly chart. In addition, it would be a break below the August/October double bottom. Even if today closes near its low, it would be a sell signal bar on the daily chart.
h3 Importance Of Friday’s Close/h3Since the 5-minute chart has been sideways, day traders are scalping. But, today is unusually important. A rally would create a buy signal bar on the daily chart. But, a close near the low will create a sell signal bar on the weekly chart. A close below last week’s 1.1301 low would create a stronger sell signal bar on the weekly chart. These possibilities could affect the next several weeks. There is therefore an increased chance of a breakout up or down today.
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