The forex market on the daily chart has rallied for 2 months. It is breaking above a weak bull flag. The bulls want the rally to continue up to the February 2018 high with only brief pullbacks. However, the daily and weekly charts are more consistent with a bigger pullback before the rally reaches its target.
If the EUR/USD reverses down from here, there will be a double top. The reversal would probably be minor, and just add more bars to the 2-week tight trading range. There would then likely be at least one more brief leg up.
But if the rally resumes for several days to at least 50 pips above the Dec. 4 high, and then reverses, there would be a wedge top. Since there would also be a bigger wedge top on the weekly chart, there would be a nested wedge top. That is a reliable reversal pattern. Traders would expect a couple legs down on the weekly chart. The result could be a couple months of pulling back to support at around the Nov. 4 low.
Traders expect higher prices soon, but they will look for a reversal for a couple months before the rally reaches the February 2018 high.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market has rallied overnight in a tight bull channel. Day traders so far have only been buying.
However, a bull channel usually has a bear breakout. The chart will then transition into a trading range. Once there is a 20-pip pullback, or a trading range lasting a couple hours, day traders will also start to sell reversals down for scalps.
Can today reverse back down to the low of the day? It could, but a reversal will more likely stop at around 1.2140, which was the high on the open, and the start of the channel that began in the European session.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.