The forex market on the daily chart began a 2nd leg up 4 days ago after a strong rally 2 weeks ago. The bulls want a successful breakout above the Sept.1 high at the top of the 4-month trading range.
Everyone can see that there have been many strong legs up and down for 4 months. Several broke above or below the range, but each reversed. That is what typically happens when the market is in a trading range, and that is what traders will continue to expect until there are consecutive closes above or below the range. That breakout will eventually happen. And at that point, traders will look for a 400-pip measured move up or down.
There are now 4 consecutive bull bars with closes near the high of each bar. That typically leads to at least slightly higher prices. But, despite the strong 3-week rally, a reversal down from around the top of the range is more likely than a successful breakout above the range.
Traders are buying because there is no reversal yet and there is room to the top of the range. But will they keep buying if the EURUSD reaches the September 1 high? We will find out.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market rallied from around yesterday’s close to above yesterday’s high. So far, today is a 4th consecutive bull trend day on the daily chart.
However, the overnight rally was small and brief. The EUR/USD has been sideways for the past several hours. Traders are deciding if the EURUSD will successfully break above the September 16 lower high this week, or again reverse down, like it did last week.
With today’s small range, traders suspect that a breakout above, or a reversal down might have to wait for tomorrow. Also, with a 20-pip range over the past 4 hours, it is even difficult for scalpers to make any money. But with room to last week’s high and no 20-pip pullback in 6 hours, day traders are mostly buying, hoping for the rally to reach last week’s high.
The EUR/USD is near a price where it has reversed down many times over the past 4 months. That increases the chance of either a breakout or a reversal this week. But there is room to last week’s high and the bears have not even been able to make a scalp overnight. Traders expect at least slightly higher prices today.
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