The 5 day selloff in the EUR/USD has been strong. It is testing the 1.1100 support level in Europe with 45 minutes to go before the NYSE opens. That level is the bottom of the wedge top on the 60-minute chart, which reversed down on February 11. It is also the top of the 2 month trading range on the daily chart and the 20-day EMA on the daily chart. Even though the selloff has been very strong, it is now climactic and at support, just like the S&P 500 index is in a buy climax at resistance. Both should enter a 2-day trading range today.
The EUR/USD 60- and 240-minute charts have been in a shallow bear channel for 3 days. Although it is a bear trend, it is basically a trading range that is sloping down. It broke to the downside over the past 3 hours. That breakout will probably fail and the trading range will probably be the final bear flag in this leg down. The bounce will probably last a couple of days. The initial target is the top of the tight trading range just below 1.1200. If the bulls reversed up without 1st allowing a bear breakout, the upside target would have been higher.
The selloff has been strong enough to make traders wonder if the rally on the daily chart has ended with the 2 strong legs up from the December low. The daily chart has been in a trading range for a year. Trading ranges typically contain a series of 2 legged moves up and down, with each on disappointing trend traders who are hoping for a breakout. Eighty percent of trading breakout attempts fail, and the month long rally was likely to not lead to a bull breakout. However, traders were not sure it the rally would test higher up in the range.
Over the past few days, the odds are that it will not reach the August top of the range. However, it will probably bounce within a couple of days. The selloff has been strong enough so that the odds are that bears will sell the rally for at least a 2nd leg down on the 240-minute chart. After a wedge top, 2 legs down is the usual minimum goal. It will then probably test down to 1.1000, which is the middle of the year long range, and it has been tested repeatedly after every rally and every selloff. There is also a bull trend line there, which will probably be hit on the 2nd leg down.