The EUR/USD 240 minute is still in a broad bull channel.
The broad bull channel is now in its 4th week. Traders should think of a bull channel as a bear flag. When it is broad like this, there is a 60% chance of a bear breakout and then an evolution into a trading range. While it is a bull trend, there is only a 40% chance of a strong bull breakout and an accelerated bull trend.
There is no sign of a top. Yet, bulls are taking partial profits at every new high. In addition, bears are selling above prior highs for 50 pip scalps. With both bulls and bears selling, the EUR/USD is pulling back deeply after every new high.
However, the bears are unwilling to sell lower and to hold. In addition, the bulls are buying again above the most recent higher low. The result is that the bull channel continues to grow.
Bull Channel To End
The channel has now had 5 new highs. Since that is unusual, the odds are that it will end this week. While the odds favor a bear breakout and then a trading range, there is still a 40% chance of a bull breakout and a measured move up. Until then, traders will continue to trade it like a broad bull channel.
Overnight EUR/USD
The EUR/USD pulled back overnight after another strong rally to a new high. It has been in a narrow range for the past 12 hours. Every new high in the broad bull channel led to a trading range that lasted about 24 hours, and then a pullback to a higher low. Hence, the odds are that today will be mostly sideways, even though the 60- and 240-minute charts are in a bull trend. Yet, because this channel has lasted an unusually long time, the odds are that there will be a breakout up or down this week.