The daily Forex chart has 4 bull bars, but only one is a big bull bar closing near its high. Furthermore, today so far is a small day and its high is near the October 21 high. This looks more like a test of that high rather than a resumption of a bull trend. Consequently, the rally will probably lead to another pullback from here, or from slightly above at the 13 month bear trend line.
The bears were expecting a 2nd leg up after the strong October rally. They want a double top with the October 21 high and then a resumption of the 21-month bear trend. But the 4-day rally has all bull bars. Also, there is room to the 13-month bull trend line magnet above. Therefore, the bears will probably need at least a couple bear bars before they can get a reversal down.
When the price action is not particularly strong for either the bulls or the bears, the chart typically has to go sideways for more bars. Traders expect sellers around the 13-month bear trend line and the October 21 high and buyers around the October 25 and 15 lows.
Today is the last day of October. October is an outside up month on the monthly chart. It will probably close above the September high. That would increase the chance of at least slightly higher prices in November.
Weekly Chart Forming High 1 Bull Flag Buy Signal Bar
Tomorrow is Friday and therefore the price action today and tomorrow affects the appearance of the weekly chart. So far this week is a bull inside bar on the weekly chart after last week’s pullback.If the bulls can get the week to close near its high, this week would be a good buy signal bar for next week. The 3 week rally in October on the weekly chart was strong enough to make at least slightly higher prices likely next week.
The 5-minute Forex chart has had no follow-through buying so far today after yesterday’s strong rally. It has been in a 30-pip range and there have been several small reversals. Day traders have been scalping.
Traders are wondering if yesterday was a resumption of the bull trend or simply a buy vacuum test of resistance. They may need a few days to decide. This makes a small sideways day likely today.
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