The forex market on the daily chart so far today, has formed a big bull trend bar, with a close far above the top of the month-long trading range. This is a breakout above a head and shoulders bottom bull flag.
The bulls want today to close near its high, which would be far above the Jan. 22 high. Then, they need tomorrow to have at least a small bull body. If they get both, traders will look for the rally to have at least a 2nd leg up, and test the Jan. 6 high. But if today closes in the middle of the day’s range, or if tomorrow has a bear body, traders will expect this breakout to fail.
Overnight EUR/USD Forex trading
The EUR/USD forex market on the 5-minute chart rallied strong overnight. Day traders have only been buying, and they bought for a swing trade and for scalps. The EUR/USD has been going sideways for a couple hours. However, the range is only 15 pips tall. That is not big enough for day traders to begin to sell. They will only buy until there is at least a 20 pip pullback. Even then, it will still be easier to make money as a bull.
Can today reverse down? Yes, but the bears will usually have to get at least one 20-pip selloff first, and then some kind of a double top. It is more likely that today will be mostly sideways for the remainder of the day.
The fight will be over the close. The more the day closes near the high, the more likely the breakout will succeed. But if the bears can get the day to close in the middle of its range, and around the Jan. 22 high, the bulls will need a strong bull day tomorrow to make traders conclude that the breakout will be successful.
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