Yesterday was a bull day after a 6 day selloff down to support on the EUR/USD daily Forex chart. There will probably be a trading range between 1.15 and 1.1650 for over the next week or two.
The EUR/USD daily Forex chart sold off for 6 days down to support. Wednesday was an especially big outside down day and therefore climactic. It and yesterday are at the support of a 50% pullback from the rally from August 15, the September 10 higher low, and the 1.15 Big Round Number. This will probably halt the selling for at least a week. Consequently, bulls will buy below the prior day’s low and on reversals up.
Since the selling was strong, the bears will sell the 1st reversal up. The high of a sell climax is a magnet because weak bears put their stops just above. This will probably result in a test of Wednesday’s high and 1.16 within a week.
But, when the selling is as strong as this has been, the bears know that the 1st reversal up is typically minor. They therefore will sell the 1st rally to resistance. Other resistance above is the 20 day EMA and a 50% pullback, which is around 1.1650
Overnight EUR/USD Forex trading
The EUR/USD 5 minute Forex chart briefly bounced on the unemployment report. The report therefore so far appears unimportant. Because the daily chart has a sell climax down to support, day traders expect a trading range. They will therefore buy around the prior day’s low and on reversals up, and sell around the prior day’s high and on reversals down.
Furthermore, they expect that strong breakouts will not have strong follow-through as long as the 6 month range continues. This will make them look for reversal setups rather than strong trends. The developing small trading range will probably last for at least a week. The low will probably be around yesterday’s low or within about 50 pips below. Traders will look for a top above Wednesday’s high up to around 1.1650.