The on the daily chart reversed down on Friday from just above the resistance of the September 2018 high. There was a parabolic wedge rally over the past several weeks and it was nested within a 4 month wedge rally.
I wrote last week that traders expect profit-taking and at least a couple weeks of sideways to down trading. The obvious targets are the support at the EMA and the breakout point, which is the March 9 high. The profit-taking could continue for a month and test the June 19 low. That is the start of the final leg up in the wedge, which is often a target after a wedge top.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market sold off overnight. There has been a couple legs down with most of the trading being sideways.
The EUR/USD has been sideways of a couple hours. This is probably the start of a pullback on the daily chart that will last at least a couple of weeks. Consequently, the bulls who have not yet taken profits will sell on rallies. Also, the bears know that the bulls will be more interested in selling rallies than buying. They too will sell rallies.
This should result in at least a couple weeks of sideways to down trading. There will be some strong bull trend day along the way, but the EUR/USD should work lower.
Can today’s selloff reverse back up to the high? Yes, as I said, there will be bull days, which will form High 1 buy signal bars on the daily chart. But, the bulls will probably not be able to form more than a 2 – 3 day weak rally for at least a couple weeks. Day traders expect that there will be more opportunities to sell than buy.
Since the EUR/USD has spent so much time in trading ranges overnight, traders are both buying and selling. They have been mostly looking for scalps.
Because the daily chart has been up so strongly, the bulls might be able to get today to close back above the midpoint of the day’s range. But, today will probably not reverse back up to the open.
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