The EUR/USD forex market on the daily chart has been sideways for 4 weeks. But the trading range is in a bull trend and it is, therefore, a bull flag. That means there is a slightly higher chance of a bull breakout.
EURUSD Forex reversing up from bottom of bull flag
The EUR/USD rallied for 2 days last week and then pulled back to test the bottom of the trading range. It is reversing up again today. If today closes near its high, it would further increase the chance of a break above the top of the range.
When a market is in a trading range, the probability of a bull or bear breakout is rarely more than 55%. The market would not be going sideways if one side had 60% chance of more of winning. However, if today closes near its high, the bulls will have a 55% chance of a breakout above the June 16/June 23 double top.
It is important to remember that there is no breakout until there is a breakout. Consequently, the bears still have a 45% chance that the 2 day rally will fail. If there EUR/USD reversed down this week from below the double top, the odds will shift back to 50-50, or possibly even slightly in favor of the bears.
OVERNIGHT EUR/USD FOREX TRADING
The 5 minute chart of the EUR/USD Forex market rallied from last week’s close overnight. Day traders have only been buying for 5 hours after a 28 pip pullback at the start of the European session. If there is another 25 – 30 pip selloff this morning, day traders will begin to sell for scalps as well as continue to buy.
The key today is whether the day will close near its high. The closer it closes to the high, the more traders will expect higher prices tomorrow. But if the bears get the day to close in the middle of the range, traders will look for a sideways day tomorrow.
