The forex market on the daily chart so far, has a bull inside day today. If today’s low remains above yesterday’s low, the bears will see today as the 2nd sell signal bar in 4 days. Today would then be a Low 2 bear flag sell signal bar.
The bulls hope that last week’s reversal up will lead to a bull trend. They see the 3-day pullback as a bull flag. If today is a bull day, it would be a High 1 buy signal bar. They see last week’s rally as a reversal up from above the Nov. 4 low. Also, the bear channel has had 3 bottoms since the Jan. 1 low. It is therefore a wedge bull flag.
So, we have both a bull flag and a bear flag. What will happen? After a sell climax, traders expect at least a small 2nd leg sideways to up. That could mean a single bull bar. If today closes above its midpoint, it will meet the minimum expectation of traders. More bears would be willing to look to sell for another leg down.
However, after a sell climax and a 3-month selloff, traders expect the reversal to last more than 6 bars, and retrace more of the final leg down. Consequently, it is more likely that the EUR/USD will go more sideways to up for at least another week. A common target is the top of the most recent leg down. That is the Mar. 3 sell climax high. But with the EUR/USD being sideways for 4 days and with the FOMC tomorrow, today will probably remain small.
Overnight EUR/USD Forex Trading
The 5-minute chart of the EUR/USD forex market reversed up from above yesterday’s low overnight but so far has been unable to get above yesterday’s high. The reversal up was strong enough so that the EUR/USD will probably hold above the overnight low. That means it should remain sideways to up for the remainder of the day.
There have been many reversals overnight.
Day traders have been both buying and selling, but they have been scalping. Despite the reversal up, there is currently a 50% retracement. The EUR/USD is now almost back down to the open of the day.
Day traders will continue to scalp reversals up and down, unless there is a strong breakout in either direction. There is no sign of that at the moment.
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