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EUR/USD: Minor Upward Reversal Likely Soon

ByAl Brooks
Published 07/08/2022, 09:29 AM
EUR/USD
0.07%

EUR/USD Daily Chart

  • The EUR/USD is likely to bounce over the next couple of days.
  • The market now has three consecutive bear bars; however, the third bar is smaller, indicating that the market may pull back to test the 2017 low.
  • The market is also in a 9-bar bear micro channel, so the first reversal up is probably minor.
  • Even though the odds favor a second leg down following the July 5 – 6 bear breakout, the odds are the market will have to test the 2017 low soon. Some bulls bought the low and scaled in lower, and they will probably be able to exit their long positions back at the 2017 low.
  • The 9-bar bear micro channel is climactic, increasing the odds that the market will have to bounce soon.
  • Some bulls who bought the 2017 low and scaled in lower will be disappointed enough that their goal is now to avoid a loss rather than to make a profit by exiting back at the 2017 low. This means the market may stall under the 2017 low.
  • Bears want the overall broad bear channel to continue to form lower prices. However, odds favor a test back to the midpoint of the two-month trading range (May – June).
  • Today is Friday, so weekly support and resistance are important.  The midpoint of this week is 100 pips above the current price, and the market is not likely to reach it today.
  • Bulls will try to create as big of a tail as possible to disappoint the bears. Bears want the opposite and will try their best to close this week’s bar on its low.

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