The EUR/USD on the daily chart has rallied in a weak Small Pullback Bull Trend for 2 weeks. The bulls see Friday as just another small pullback, this time from a break above the June 16/June 23 double top. It is a High 1 buy signal bar, and the buy signal triggered today when today went above Friday’s high
EURUSD Forex pullback from breakout but also double top major trend reversal
However, the bears see Friday as a fail breakout above a 3 week range. It is their sell signal bar for a lower high major trend reversal.
Both the buy setup and the sell setup are credible. That means that the chart is in a trading range, which it obviously is, and that it is still in Breakout Mode. The probability alternates a little in favor of the bulls and the bears, but is stays very close to 50% for both. Until there is a breakout, there is no breakout. Traders will continue to look for minor reversals every 2 – 3 days.
OVERNIGHT EUR/USD FOREX TRADING
The 5 minute chart of the EUR/USD Forex market broke a little above Friday’s high, but has stalled. If today closes far above Friday’s high and on the high of the day, traders will expect a breakout above last week’s high. They then would expect a test of the June 10 high and the March 9 high within a couple weeks. The bigger today’s bull body and the more the day closes on its high, the more likely the bull trend will test the March high.
The bears always want the opposite. At a minimum, they want today to close below Friday’s high. They would prefer for today to close on the low. It would then be a reasonable sell signal bar for a 2nd reversal down from the June 16/June 23 double top.
OVERNIGHT EXPANDING TRIANGLE
Because the overnight range has been small, day traders have been scalping. Today broke above Friday’s low overnight, but then sold off to below the session low. It is now back above Friday’s high.
This is bullish and day traders are more willing to buy pullback than to sell rallies. But unless today breaks far above Friday’s high, day traders will still be willing to sell reversals down for a scalp.
Since today reversed up from a new low, it will probably not trade back down to the low. That reduces the chance of a big bear day.
However, because of the reversals overnight, there is now an expanding triangle on the 5 minute chart. That is a potentially credible sell setup, but the bears need a strong reversal down. So far they are not getting it. Today will probably remain a small, scalping day. If there is a trend, up is more likely than down.
