The EUR/USD daily Forex chart is in a bull trend. However, it is stalling far below the top of the bull channel. In addition, it is at the top of the 2 year range, Furthermore, it is having bear bars after strong bull bars. Consequently, it is probably transitioning into a trading range that will last several months.
The EUR/USD weekly chart has rallied to 1.1500 many times over the past 2 years. Yet, it has failed to strongly break above it. Will this time be different? Probably not.
The daily chart is stalling far below the top of its 7 month bull channel channel. Furthermore, traders can begin to draw wedge tops. If there is one more new high after a small pullback, that would probably create another wedge top. The bulls need a strong breakout above 1.1500 and then 1.1700 before traders will conclude that the weekly and monthly charts have broken out into a bull trend. While the current rally might test up to 1.1700, it looks like it is beginning to stall here.
The EUR/USD daily chart will probably soon test down to the July 5 low around 1.1310. It will probably bounce there, which is also at the 4 month the bull trend line. However, that bounce will probably fail and traders will begin to see a small trading range.
Whether or not the bull trend resumes up to 1.1700, the daily chart will probably test down to the June 20 low. This will result in a bigger trading range. It will be both taller and longer. The process will probably take several months.
Consequently, if a trader has been long for the past few months, this is a good area to begin to take profits. In addition, if a trader is looking to position himself for the next several months, he will begin to look to sell. A bear leg in a 3 month trading range is more likely than a bear trend down to the bottom of the 2 year range. Therefore, traders on the daily chart will probably look to exit with 200 – 300 pips profit on tests down to support.
Overnight EUR/USD Forex trading
The 240 minute EUR/USD Forex chart has been in a 100 pip range for 6 days. As a result, day traders have been able to scalp for 20 – 40 pips. The EUR/USD 5 minute chart sold off 80 pips overnight, and retraced half over the past 2 hours. Big Down, Big Up means Big Confusion. That usually results in a trading range. Therefore today will probably be a continuation of the 6 day range. Most of the trading over the past 5 hours has been in a 30 pip range. Hence, scalpers will probably look for only 10 – 20 pips today in their day trades.