The daily chart of the Forex market is neutral. When you look at it, there is no sense that the price is terribly wrong and it needs to quickly move up or down to a more fair price. It is in the middle of a 5 week trading range, and that range is in the middle of a 5 month trading range.
The bears are hoping for a reversal down from last week’s failed breakout of the top of the range. But the sell signal bar 3 days ago was weak and there was no follow-through selling after the one day reversal down.
The bulls hope that Friday’s selloff was just a pullback from what they hope will be successful breakout above the range. However, the breakout was small and yesterday was a weak buy signal bar.
The October rally was strong enough to have a 2nd leg sideways to up. So far, the 2nd leg is sideways.
The bear trend line is now below the October high. That is one of the targets, and the can get there by simply continuing sideways. That would achieve the minimum goal for the bulls after their October 1 nested wedge bottom.
Traders are waiting for a sign that either the bulls or bears are taking control. In the meantime, they are looking for 1 – 3 day trades and betting on a continuation of the range. Upcoming potential catalysts for a breakout are tomorrow’s , this weekend’s China tariff decision, and, most importantly, clarity on Brexit.
The 5 minute chart of the Forex market rallied to above yesterday’s high overnight. That triggered a buy signal on the daily chart for a reversal up from Friday’s pullback.
However, today only went 6 pips above yesterday’s high and it then pulled back below the high. In addition, yesterday was only a doji bar, which is a weak buy signal bar. Finally, the overnight range has only been 22 pips. Consequently, day traders are continuing to look for reversals and 10 pips scalps as they wait for a breakout up or down. There is no sign yet that one will come today.
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