The Forex market on the daily chart has been trending down since its buy climax to the September 2018 high. The 2-week rally has had 3 small legs up. It is therefore a wedge bear flag.
But the Sept. 21 sell climax high is a magnet above, as is the September 2018 high. Consequently, the EUR/USD should continue a little higher before the bears will try to resume their bear trend. If there is a sell signal bar this week, traders will look for a resumption of the test down to the June 10 high, which was the breakout point of the strong July rally.
The EUR/USD is back in its 2-month trading range. That means that the bulls and bears are nearly balanced. At the moment, the probability slightly favors the bears. But the bulls see this 2-week rally as the early stage of a Small Pullback Bull Trend. They are hoping that the 2 legs down from the September 1 high is the end of the pullback from the 4-month buy climax.
But to convince traders that the July bull trend has resumed, the bulls need at least a couple closes above the September 10 high. Most traders want to see a strong break above the September 1 high.
Overnight EUR/USD Forex Trading
The 5-minute chart of the EUR/USD Forex market has been sideways overnight. It is at a new high, but it might be forming an expanding triangle. That could limit the upside from here today.
The EUR/USD overnight broke slightly above yesterday’s high and the 1.18 Big Round Number. However, the developing expanding triangle means that there has been a lot of trading range price action. The rally over the past few hours will probably evolve back to a trading range within the next hour or two.
The bulls hope that today continues up in a bull trend, but at the moment, the rally from the low is probably going to soon go sideways again. The day will then be both an expanding triangle and a trending trading range day.
Since many days over the past 2 month went above and below the September 2018 high of 1.1816, the EUR/USD will probably test above it this week. It might get there today since it is only 8 pips above today’s current high.
Because of that magnet and the magnet of the Sept.r 21 high of 1.1872, traders have been buying pullbacks for 2 weeks. It therefore has been easier to make money as a bull day trader.
But the EUR/USD is getting near important resistance. The bulls will become less willing to buy and the bears will be more eager to sell reversals down. This increases the chance of a few sideways days between 1.18 and 1.1872.