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EUR/USD: Bulls Want Upside Breakout From Bear Flag

Published 10/20/2022, 09:22 AM
Updated 07/09/2023, 06:31 AM
EUR/USD
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EUR/USD Daily Chart

  • The EUR/USD has been forming a triangle since the late September bear breakout.
  • Bears are trying to form a bear flag (October 18th) following the 4-bar bear micro channel ending on October 10th.
  • Bulls want an upside breakout of the bear flag (purple dashed lines) and a measured move up.
  • The odds still favor a second leg up following the October 4th rally. Although October 4th rally was a buy vacuum test of the apex of the trading range (August 15th – September 15th), it was a strong enough buy-the-close bar that traders would expect a second leg up.
  • These bulls never had a chance to exit breakeven back at the October 4th close after the disappointment bar (October 5th), increasing the odds that the market will have to return to the October 4th close.
  • Overall, the bears, have been in a broad bear channel since the middle of 2021, and the odds favor the bear channel evolving into trading. This means that odds favor a bull rally lasting a couple of months and the market going above a major lower high such as the September or August high.

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