Abstract:EUR/USD: Wedge Rally To Double Top
EUR/USD saw an overnight selloff after a buy climax. Traders are deciding if was just a brief pullback in the bull trend, or if it signals the start of a trend reversal down. Todays close will help traders decide. The single currency was turning down from a micro double top and wedge rally, to a double top with the Feb. 25 high.
If EUR/USD closes today near its low, then the selloff will probably reach the May 5 low, which was the bottom of last weeks buy climax, as well as the bottom of a 4-week trading range.
Because of last weeks strong rally, a close today in the middle range or above will probably provide bulls with at least one more leg up to Feb. 25.
EUR/USD Forex Chart
Overnight EUR/USD forex trading on the 5-minute chart
Sold off overnight, but big reversal up in past 10 minutes. Now, in middle of days range.
Sell climax and reversal up were strong enough for this to be low for rest of day.
Bears need today to reverse back down and close near low of day, but currently have only 40% chance.
Bulls want today to close in the middle of the range, or near the high of the day. That will increase the chance of today being just a pullback in the 6-week rally.
At the moment, the bulls are winning and day traders are buying aggressively.
Bulls want today to close here or higher, but Big Down, Big Up creates Big Confusion. That typically leads to a trading range. Therefore, day traders will expect the bull trend reversal to either weaken into a bull channel or evolve into a trading range.
If there is a 20-pip pullback, day traders will again sell, but probably only for scalps.
Today will probably be sideways or up for the rest of the day.
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