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EUR/USD Bears Likely to Get Another Leg Down

Published 05/16/2023, 09:22 AM
Updated 07/09/2023, 06:31 AM
EUR/USD
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EUR/USD Daily Chart

  • The EUR/USD formed a bull reversal bar yesterday. However, it is small and follows large bear trend bars.
  • The odds are there are sellers above yesterday’s high and that the market will go sideways to down.
  • The bulls want the recent selloff over the past few days to lead to a higher low and form a 2nd leg bear trap. Next, the bulls want to trap the bears and get an upside breakout, testing the high of May 11th.
  • The problem with the 2nd leg bear trap argument is that the channel down over the past week and a half is tight. This means that the first reversal up will likely be limited.
  • This means traders should expect lower prices unless the bulls can develop more buying pressure. The bears still want to get to the March 24th bottom of the bear channel.

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