The forex market on the daily chart is again testing the Jan. 1 sell climax low. With the overnight reversal up from below support, the odds are against a close far below the Jan. 1 low today.
The bears got a big bear bar in early February that closed below the Jan. 5 low, but they need consecutive closes below support to convince traders that the bear breakout will succeed. They are trying to get another close below today, but they now need closes below the new low of the trading range, which is the Feb. 5 low.
After 4 strong days down, the bulls will probably need a micro double bottom before they can get a leg up. With the EUR/USD looking like it will not close below the January low and with the bulls needing a micro double bottom, there is an increased chance that today will be sideways.
Overnight EURUSD Forex trading
The 5-minute chart of the EUR/USD forex market sold off again below the Jan. 1 low and again reversed up. It did not fall below the Feb. 5 low, which is the new low of the 3-month trading range.
The overnight reversal up so far has only been 40 pips, and the EUR/USD has been sideways for 3 hours. The minimum goal for the bulls is to have today close above or around the Feb. 17 low. If the EUR/USD simply continues sideways here, they will have achieved their goal. That would increase the chance that it will reverse up again from the bottom of the range.
Can today collapse down to the Feb. 5 low or rally strongly today? Probably not. The range and the legs have been small. Day traders have only been scalping. With the EUR/USD oversold, if there is going to be a big trend today, up is more likely. However, a continuation of the trading range day is most likely.