The forex market on the daily chart is breaking below a 3-week triangle. However, it is just above the bottom of a 2-month trading range. The bears need consecutive closes below the range, before traders will look for a measured move down to the November low of 1.16. While the probability currently is slightly greater for the bears, a single big bull bar could flip it back in favor of the bulls.
There is a FOMC today at 11 am PST, which can affect all financial markets. Day traders should exit their positions ahead of the report, and wait at least 10 minutes before resuming trading.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market sold off in a tight bear channel overnight. Yesterday was a buy signal bar on the daily chart, yet today is breaking below the low of the bar, instead of above the top.
The bears hope that this is a resumption of the bear trend that began on Jan. 6. If it is, there will many, many bear trend days over the next couple weeks.
The overnight selling has been in a tight bear channel. Day traders have only been selling.
All financial markets typically enter a trading range an hour or more before the 11 am PST FOMC announcement. If there is a trading range ahead of the report, day traders will look to buy reversals up from the bottom, in addition to continuing to sell.
Can today reverse up into a bull trend? When a selloff has been relentless like this, the bulls only have a 30% chance. There is a 70% chance that today will be sideways to down all day. However, since the FOMC can be a catalyst for a big move up or down, traders will look for a possible reversal up after the report, even though it is unlikely.
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