The forex market on the daily chart is turning down from a double top lower high major trend reversal. If today closes on its low, the EUR/USD should fall at least to the Oct. 15 low. The bulls will try to form a double bottom with that low or with the Sept. 25 low.
I said last week at the top of the rally that reversals were more likely than breakouts. That is true on the way down as well. But if today remains a big bear day, it will probably be the start of a selloff that will last at least another week.
Also, it should have at least a 2nd leg down. Legs in trading ranges often have 2 legs, like the rally to the Sept. 1 high, the selloff to the Sept. 25 low, and the rally to the Oct. 21 high.
The weekly chart is important. Despite the 3-month trading range, there was a 4-month wedge top. Today could be the start of a 2nd leg down from that wedge top. If it is, the 1st target is the Mar. 9 high, which was the breakout point for the summer rally.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market has sold off in a Small Pullback Bear Trend overnight. That is a strong bear trend. Day traders have only been selling.
However, the day’s range is big and the selloff is beginning to have a wedge shape. That typically will attract profit takers. If so, the bear trend will begin to transition into a trading range for at least a couple hours.
But until there is at least a 20-pip bounce, day traders will only sell. Once there is a 20-pip bounce, day traders will also begin to buy reversals up from 10 to 20-pip scalps.
The bulls want a trend reversal up. They will probably not get one today. If they do, they will have to stop the selling and enter a trading range for at least a couple hours first.
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