The daily chart of the Forex market had a huge reversal down after a huge reversal up. It is in an expanding triangle. However, the bulls need a strong reversal up to convince traders that the 8 month trading range is intact. Without that, the bears will try to continue the 2 year bear trend down to par (1.00).
Friday and Monday formed a micro double bottom in a sell climax. Because they were doji candlesticks, they lack conviction for the bulls. That makes them weak buy signal bars. However, traders expect a short covering rally soon.
By today going above yesterday’s high, the EUR/USD triggered a weak buy signal. Since the 2 week selloff has been climactic, the 1st reversal up will probably be minor. A minor reversal means that it becomes either a bear flag or a bull leg in what will end up as a trading range. There is only a 30% chance of a major reversal into a bull trend without at least a double bottom.
Overnight EUR/USD Forex trading
The 5 minute chart of the EUR/USD Forex market broke above yesterday’s high. This triggered a minor buy signal on the daily chart. However, the rally only went slightly above yesterday’s high before pulling back. This is a weak bull breakout.
The EUR/USD has been sideways for 6 hours. Day traders have been scalping for about 20 pips. There is no sign that this is about to end.
The bulls would like today to close far above yesterday’s high. But they would be satisfied with it closing just a little above that high.
The bears want the day to close on its low. It would then be a stronger Low 1 sell signal bar for tomorrow. Their minimum goal is a close below yesterday’s high. They would like a close below the open so that today would be a more reliable sell signal bar for tomorrow.