The Forex market on the daily chart has rallied for 5 days from the bottom of a 2-month trading range. The bulls hope that this is the resumption of the 10-month bull trend. But so far, the rally lacks consecutive strong bull trend bars. It looks more like another small leg in the range. The bulls need a strong break above the Jan. 13 high, and then above the top of the range, before traders will conclude that the bull trend is resuming.
Trading ranges are neutral, but there are times when they are slightly more bullish or bearish. At the moment, this trading range is slightly more bearish. But a couple strong bull days would shift the probabilities in favor of the bulls.
The bears want a lower high. If today closes near its low, it would be a sell signal bar for a lower high major trend reversal. There would also be a head and shoulders top. However, the Jan. 13 high is an important magnet, and there is still room to that target. Consequently, there might be one more brief push up next week, before the bears try to break below the bottom of the trading range. If the bears succeed, they will look for a measured move down to the Nov. 4 low at 1.16.
Overnight EUR/USD Forex trading
The EUR/USD Forex market rallied overnight on the 5-minute chart and then reversed down. The range has been small and there have been many reversals. Day traders have been scalping up and down for 10 pips.
The bulls want the day and week to close near the high of the day. That will increase the chance of higher prices next week.
The bears need more than the day closing on the low. They need it to close at least 20 pips below the open so that today will be a strong sell signal bar for next week.
With today’s range being small and with room to the Jan. 13 high above, the EUR/USD will probably go at least a little higher next week. That reduces the chance that it will trend down strongly to far below the open of the day. Today more likely will remain sideways. Then, next week, traders will decide if the EUR/USD has to get closer to the Jan. 13 high before again testing the bottom of the 2-month trading range.
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