Today so far is a bull inside day after consecutive bear days in a 6-week tight bear channel.
There is now a micro wedge with the Sept. 20 and Oct. 6 lows. The first reversal up in a tight bear channel is typically minor.
However, the daily chart is oversold and almost at important targets below. That increases the chance of a reversal up to above the August 20 low at any time.
I have been saying that the probably will have to dip below the Mar. 9, 2020 high because that was last year’s breakout point.
The EUR/USD has been in a trading range for 7 years. When in a trading range, a market typically falls below support before rallying.
The June 10, 2020 high of 1.422 is also a breakout point and a magnet below. Additionally, it is at a measured move down from the July 30/September 3 double top. Since there are 2 reasons to get there and the momentum down is strong, the EUR/USD will probably test it as well.
When a market reaches a measured move below a double top bear flag, profit takers typically come in. There will probably be at least a 2-week rally from the breakout points at around 1.15 or 1.14.
It is important to note that this week so far is the sixth consecutive bear bar on the weekly chart. A streak of that duration has not happened in 3 years. There have not been 7 consecutive bear bars since 2014. Therefore, the weekly chart should have a bull body either this week or next week.
If it comes after dipping below the Mar. 9, 2020 breakout point, it could be the start of a rally over then following few weeks.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.