EUR/USD: Tight Trading Range | Investing.com

  


Yesterday triggered a High 2 bull flag buy signal, but Monday had a bear body and it followed a bear bar on Friday. Also, the bear channel from the Sept. 3 high was tight. This was a weak buy setup.

There were sellers above Monday’s high, and yesterday closed back near the open. A doji bar is a weak entry bar.

EUR/USD Daily

A weak entry bar and a weak buy signal usually does not lead to a strong trend.

So far, today is a bull bar, but the EUR/USD has been in a tight trading range for 6 days. Traders are deciding if the selloff from the September 3 high is a pullback from the Aug. 20 rally or a resumption of the bear trend that began in May.

6 of the past 8 days have had bear bodies, although most were small and had prominent tails. This is therefore not as bearish as it could be.

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The late August rally was strong, and it began at the bottom of a yearlong trading range.

The 7-day selloff was weak, and it looks more like a pullback in a bull trend than a resumption of the bear trend.

The strong rally from support and the weak reversal down makes it more likely that the selloff will form a higher low. Traders should expect a test of the Sept. 3 high.

But because the EUR/USD is in the middle of a 4-month trading range, the probabilities cannot strongly favor the bulls or bears. The chart is only slightly more bullish than bearish. That could quickly change with a couple big bear days closing near their lows.

All financial markets might be sideways into next week’s FOMC announcement. It could lead to a strong move in either direction.

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