- The EUR/USD has been in a tight trading range for the past several bars and is in breakout mode.
- The most important thing to know is that the probability is close to neutral. If one side had a significant advantage, the market would be racing up or down and would not be going sideways like it is now.
- Bulls want a test of the June 9th high, and the bears want to reach the 2017 low (blue line).
- The odds are that the market will probably reach the June high soon, regardless of if the market sells off to the 2017 low first.
- So, if the odds are the market will reach the June high soon, why not just buy and bet on the June high test? Some traders will do this, but the problem is that the market might break several pips below the 2017 low before it reverses back up. Also, most traders would rather buy lower than in the middle of the two-month trading range.
- Today is Friday, so the weekly chart is important.
- Bulls want today the week to close as close to its high as possible. The weekly chart is a bull body just under the bar’s midpoint.
- Bears want the opposite. They want today to have as big of a tail as possible on top of the weekly chart bar. They will also try and close below the open of the week, but that probably will not happen.
- Bulls need the market to rally about 80 pips to get a close on the high, which is not likely today. This increases the odds of the weekly chart closing around the midpoint as the bulls and bears fight over a close above or below the midpoint.
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