The daily chart of the EUR/USD Forex market formed a higher low last week after a wedge bottom. Traders expect a second leg sideways to up. The 2-week rally meets the minimum objective.
The bulls want a test of the October high and a major trend reversal into a bull trend. However, the bears want a lower high and a resumption of the 2-year bear trend.
While the weekly chart is in a bear channel, the daily chart has been in a trading range for 4 months. Trading ranges resist breaking out into trends. Consequently, both the bulls and bears will probably be disappointed by the next several weeks. There will probably be sellers near the 1.12 top of the range and buyers near the 1.09 bottom.
Since the October rally on the weekly chart was the strongest one in 2 years, there will probably be a test of the October high. But there might be a test of the October low first. Traders should expect limited downside over the next few weeks and a test of the 13-month bear trend line and the October double top. Both are around 1.12.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market broke above yesterday’s high overnight. That triggered a High 1 bull flag buy signal on the daily chart.
Today is the entry bar. So far, it is a small bull trend bar on the daily chart. While this is good for the bulls, a bigger bar would be much better. The rally over the past 6 hours has only been 30 pips. This is not a strong bull trend. Day traders are not buying as the EUR/USD is going up. They, therefore, are waiting for pullbacks. That makes a big bull trend day unlikely.
While the rally has been small, so have the pullbacks. The bears are not yet selling. If the 5-minute chart begins to go sideways for 5 – 10 bars, the bears will look to sell reversals down for 10 pip scalps.
Today will probably be a small trading range day. The bulls will continue to look for 10 – 20 pip pullbacks to buy for scalps and the bears will begin to scalp once the 5-minute chart begins to go sideways.