The bears have a double top lower high major trend reversal with the September 21 high. But, the EUR/USD is not going down. It will probably go at least a little higher, and the bears will again try to get a reversal down from a double top with either the Sept. 10 lower high or the Sept. 1 high.
The chart has been in a trading range for 4 months. There have been many strong legs up and down. Traders know that trading ranges resist breaking out. They therefore expect reversals, even though one leg will eventually break out. This 4-week rally will probably go a little more sideways to up, but as relentless as it has been, it probably will fail to continue to much above the September high.
There have been 2 sell signal bars over the past 3 days, but they have failed to lead to a selloff. When a market tries to do something a couple times and fails, it usually then tries the opposite. Traders expect at least slightly higher prices before a bear leg begins.
Overnight EUR/USD Forex Trading
The 5-minute chart of the EUR/USD Forex market overnight rallied, sold off sharply to below yesterday’s low, and then reversed up strongly again overnight. This is the 5th day in a tight trading range. The selloff and reversal up were abrupt. This makes it likely that the EURUSD will be sideways to up for the remainder of the session.
Yesterday was a sell signal bar on the daily chart. The selloff broke below yesterday’s low and triggered the sell signal. But the bulls aggressively bought it.
The rally is strong enough so that the EUR/USD might continue up to above yesterday’s high. Today would then be an outside up day. That would increase the chance of higher prices tomorrow.
Day traders have only been buying since the overnight reversal up from the sell climax. They will probably mostly buy for the rest of the day.
But if the bears get a 20-pip pullback, the rally might transition into a trading range. At that point, day traders will also look to sell reversals down from 10-pip scalps.
Can today continue much higher? It is in the middle of a 5-day tight trading range. That is a magnet and it will probably limit how much higher the rally can go. The bulls would like it to continue up 25 more pips to above yesterday’s high. If they succeed, it will probably not get much above that high because the EUR/USD would then be at the top of the 5-day range.