EUR/USD: Bear Reversal Bar |


Strong rally from the Aug. 20 low.


10 bars in tight bull channel means strong bulls, but should get pullback within next few days from around July 30 high or June 25 high.


Today broke above the July 30 high by a fraction of a pip and then reversed down. The bar could look different at the end of the day, but it is now a bear reversal bar, and there is a wedge rally to a double top. The rally has had 3 legs in a tight bull channel. It is therefore a parabolic wedge, which often attracts profit taking.


Bears want double top with July 30 high and then a break below the August low, which is the neckline of the double top.

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A reversal down would more likely be a pullback from the 2-week rally than a resumption of the bear trend.


After a complex bottom, traders will expect a second leg sideways to up. They therefore will buy the first 3- to 5-day pullback, expecting a higher low.


It would also be the right shoulder of a head and shoulders bottom where the July 25 low as the left shoulder.

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