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EUR/USD: Odds Favor Upward Reversal

ByAl Brooks
Published 04/22/2022, 09:28 AM
EUR/USD
-0.86%

EUR/USD Daily Chart

  • The EUR/USD had a bear signal bar yesterday. One can call it a Low 1 or a Low 2 (double top); it does not matter. What matters is that the signal bar is big and forcing traders to sell in the middle of a 9-bar tight trading range, which is not ideal.
  • Yesterday also came within ten pips of the March 28 low. Bulls would have bought the March 28 low during the April 5 selloff and bought more lower, confident they could exit the trade breakeven on first with a profit on their second. Since the market came within ten pips of the March 28 low, it will probably have to close this breakout point.
  • The odds favor yesterday’s bear stop entry failing and the market reversing up, which is what it looks like will happen. This may increase the odds of today having a close above the open or at least a weak bear body closing above yesterday’s low.
  • Bears hope that yesterday will lead to a successful double top (April 14 & April 21).
  • Bears also want a measured move down, breaking below the March – April range and testing the 2020 price levels.
  • Bulls want a test back up to the March high and ultimately reach the bear trend line above, which they probably will.
  • Today is a Friday, so the weekly chart is important. Few things to note on the Weekly chart:
  • Currently, the weekly chart is close to the open of the week (1.0805), which means the open of the week might be a magnet all day as traders fight over a bull or bear close on the weekly chart.
  • Since last week broke below the March 11 low (weekly chart), the bulls want this week to have a bull close which would be lousy follow-through for the bears, increasing the odds of a failed breakout below March 11.
  • As always, the day session has the potential for a big/surprise move as traders fight over the weekly chart close in the final hours of the day.

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