The forex market on the daily chart has been sideways for 4 days at the September 2018 high, which has been a magnet for 3 months. The bulls see the 4 days as a bull flag in the rally that began on Sept. 25. However, for the bears, there is a double top with the Sept. 21 high and a micro double top with Thursday’s high.
The chart is in the middle of a 3-month trading range. There is always both a credible buy and sell setup. Traders continue to look for reversals every few days. They buy low, sell high, and take quick profits. The result is that the trading range can continue a long time. With the US presidential election next week, there is an increased chance that the 4-day tight trading range at the September 2018 high might last all week.
If today closes near its low, it will be a bear inside day and a sell signal bar for tomorrow. But it would be forming in the middle of a tight trading range and just above the EMA. That is a weak sell setup.
If today closes on the high of the day, today will have a bull body. Today would form a micro double bottom with Thursday’s low and it would be a buy signal bar for a 3-day bull flag.
Overnight EUR/USD Forex trading
The 5-minute chart of the EUR/USD Forex market sold off overnight to the bottom third of the 4-day tight trading range and bounced. When the market is sideways, traders look to buy reversals up from the bottom 3rd. This is true even when the day has sold off all night.
The EUR/USD bounced 20 pips over the past 2 hours. That is enough for day traders to begin to look to buy pullbacks in addition to selling. They have been selling all night, but now they will only sell pullbacks. With both bulls and bears looking to enter on pullbacks and to take small profits, the
overnight bear trend is probably evolving into a trading range.
The bulls want today to close near its high. However, after a relentless selloff overnight, they will probably need the EUR/USD to go sideways for at
least a couple hours and form a double bottom before they can get a trend reversal.
At the moment, day traders will look to buy and sell for scalps for at least a couple hours and probably for the remainder of the day.
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