The EURUSD daily Forex chart has been sideways for 4 days just below the EMA. It reversed up for 3 days last week from the bottom of 2 bear channels.
The rally had only one big bull bar closing near its high. It was strong enough for traders to expect at least a small 2nd leg sideways to up. Yesterday met that minimum goal. Consequently, the bears will be more willing to sell again.
There is now a micro double top. The bears see the rally as a bear flag at the EMA. If today has a bear body, today will be a sell signal bar for a micro double top and bear flag at the EMA. A big bear body and a close near the low of the day today will make more bears willing to sell tomorrow below today’s low.
The bulls know that, and they therefore will try to prevent today from closing on its low. Furthermore, they want today to close on its high and above the EMA. If they achieve their goal, traders will believe that the 2nd leg up from last week’s rally will reach the Aug. 26 lower high.
Since the rally only had one strong bull bar, it is more likely that there will be a test back down within a few days. The bulls will then try again to get a 2nd leg up, but from a higher low.
The bears want a reversal down to a below the September low. Traders should expect a test down to a higher low within a few days and then another attempt at a 2nd leg up.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart so far has only had a 30 pip range overnight. It is also an inside bar and the 4th day in a tight trading range. Day traders have been scalping for 4 days as they wait for a breakout up or down. A downside breakout is slightly more likely, but it would probably form a higher low on the daily chart around the Sept. 3 reversal bar’s high.
EUR/USD Forex Market Trading Strategies
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