EUR/USD Daily Chart.
– EUR/USD is turning down from a lower high major trend reversal on the weekly chart. It is also the right shoulder of a head-and-shoulders top.
– Breakout below the May 5 low at the bottom of a two-month trading range. But, the EUR/USD is still in the middle of the 11-month range.
– Yesterday was the second consecutive big bear day. It increased the chance of lower prices next week.
– A third consecutive big bear day closing near its low would be unusual within a trading range. The bears are likely exhausted, and many will take some profits soon. Bull scalpers will also begin to buy today, looking for a brief bounce.
– Therefore, today will probably be something other than a third big bear day. If there is an early selloff, there will probably be a reversal up, to around the middle of the day’s range.
– Yesterday’s close was far below the May 5 low at the bottom of the two-month trading range. That increases the chance of lower prices over the next week.
– However, there is often a bounce back up to the breakout point. Therefore, the EUR/USD might test the May 5 low within the next few days.
– The bulls want the bear breakout to fail. If they get a bull bar closing near its high today, many bears will exit above its high.
– Since a second leg sideways to down is likely, even if today is a bull day, traders will sell a one- to three-day bounce.
– Bears want strong breakout below November low, which is bottom of 11-month trading range, and then a measured move down to the January 2017 low, which is the bottom of the seven-year trading range.
EUR/USD Trading On 5-Minute Chart
– Trading range overnight, but fell below yesterday’s low in a strong series of bear bars.
– Starting to bounce over past five minutes. Bears might be taking some profits after two-day sell climax.
– Bears hope this 30-minute selloff will be the start of another big bear day. It will more likely attract profit-takers.
– Third consecutive big bear day unlikely since still in 11-month trading range. Therefore, today will either be small bear day, a trading range day, or a bull reversal day.
– If it is a bull day, it probably will not be a huge bull day.
– The most common thing after an extreme climax is a trading range. Day traders will probably buy reversals up from selloffs and sell reversals down from rallies, and take quick profits.
– If there is a series of strong trend bars in either direction, they will swing trade. Most likely, the bears will use selloffs to take some profits, so big bear day unlikely.
– After two huge bear days, big bull day is unlikely, but the profit-taking (short covering) could be strong.