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EUR/USD: Outside Bar, Close Before June High Likely

ByAl Brooks
Published 07/28/2023, 09:14 AM
EUR/USD
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EUR/USD Daily Chart

  • The EURUSD formed an outside down bar yesterday, closing below the June high.
  • With the five consecutive bear bars down to July 24th, the odds were high that the market was in a trading range and was likely to close below the June 24th breakout point high.
  • The bulls see a parabolic wedge (July 21st, July 25th, and today’s low). The bulls hope this will be the start of a reversal up; however, parabolic wedges are often minor reversals and typically lead to sideways trading. This
  • The selloff down to July 25th was a big enough surprise that the odds were the Bears would get 2nd leg down. However, yesterday’s outside down bar is also a surprise, and it will likely have a 2nd leg down.
  • Since the market is in a trading range, traders should expect the bears to become disappointed soon. This means that today may form a bull reversal bar and make the bears consider exiting shorts and looking to sell a pullback.
  • If the bulls are going to form a reversal, they will need to build more buying pressure. At a minimum, the bulls will likely need 2-3 consecutive bull trend bars closing on their highs.
  • Overall, traders should expect to see some profit-taking after yesterday’s outside down bar. However, the market will probably go sideways and not get a strong reversal due to the tight channel down from the July high.

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