I have been saying since the December 15 high in the EUR/USD that the odds were that it would have 2 legs down on the daily chart and form a triangle that probably would last a month. The overnight selling has done enough for traders to see a complete triangle. The daily chart is now in breakout mode. The December 3 bull trend reversal was so strong that the odds still favor a 2nd leg up even if there is 1st a bear breakout below the triangle. As long as the selloff holds above the December 3 low, the odd still favor at least one more leg up.
I have been saying that the EUR/USD would have mostly trading range price action on the 5-minute chart because that is what usually happens when the daily chart is in a trading range. However, there is now a complete pattern on the daily chart. Traders will be quick to start swing trading on all time frames if a strong breakout with follow-through unfolds.
Forex markets sometimes begin trends on the weekly chart around the first of the year. The weekly chart has been in a trading range for almost a year. If a trend up or down begins, the 1st target would be a measured move based on the 1,200 pip height of the trading range. It is too early to conclude that a trend is about to begin. Traders will watch for a strong breakout with follow-through on the daily and weekly charts. Day traders will be more willing to swing trade if the higher time frames begin to break out.
The EUR/USD sold off over the past hour, with less than an hour before the NYSE opens. It is still above the overnight low. Big up, Big Down, means Big Confusion. This usually results in a trading range. However, the selloff overnight has been 100 pips. If there is a trading range, the swings might be big enough for swing trades of 50 pips. More likely, day traders will initially look for 20 pips scalps until there is clearly a trend.