The forex market on the daily chart reversed down on Friday in a 3-month bear channel. However, there were 3 bull bars and there is now a wedge bottom. Friday formed a 2-bar reversal with Thursday. It is therefore another sell signal bar. But it has a big tail below.
Traders expect at least a couple legs sideways to up. Therefore, if today triggers the sell signal by breaking below Friday’s low, the EUR/USD is more likely to enter a trading range than resume the bear trend.
Because the EUR/USD is in a bear trend, if there is going to be a surprise, down is more likely. However, the wedge bottom has created some confusion. That typically leads to sideways trading, and at least a couple small legs up.
Overnight EUR/USD Forex Trading
The EUR/USD forex market sold off early in the overnight session on the 5-minute chart. However, it then entered a trading range for the past 6 hours just above Friday’s low. Day traders have been scalping reversals up and down.
The bears will try to trigger the sell signal on the daily chart by having the EUR/USD break below Friday’s low. But even if they succeed, there will probably be buyers below, and below the Mar. 9 low.
This is because traders expect a small trading range after the wedge bottom on the daily chart. They will look to buy selloffs and sell rallies this week. This is true even if the EUR/USD goes in one direction for several days, like it did with last week’s 3-day rally.
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