The EUR/USD bulls are getting a second entry to buy following yesterday’s failed breakout of the 1.0000 big round number.
The odds favor a rally over the next couple of weeks.
The first target for the bulls is the July 27 high, which was likely an exhaustion bar.
Next target for the bulls is the 2017 low (blue line) and the bottom of the May – June trading range, which is around the same price as the 2017 low.
The odds are the market will return to the May – June two-month trading range, which will be a final flag.
What traders do not know is if the market will reverse up strongly to the 2017 low and two-month trading range or will the market reach it by going sideways to up.
Bears hope that the breakout below the 2017 low is a measuring gap just like all the other two-month trading ranges that the market has formed over the past six months (an example is the March low and May high measuring gap). However, the selloff is climactic and at major support, 1.000 big round number.
The monthly chart has been in a trading range for over seven years and is likely to continue in that same trading range, which means the odds favor a failed breakout below the 2017 low range and a reversal back into the seven-year range.
Today is Friday, so weekly support and resistance are important.
The market is at last week’s low (1.0072), so it will be an essential price level today.
Also, another thing to point out is the current bar on the weekly chart has a five pip tail on top, which means the open is the high of the current bar. This is another sign of aggressive sellers which increases the odds of the market reversing and this week’s exhaustion.
The week’s open is over 100 pips away which is probably too far to get there before today’s close. The bulls will try hard to make this week have as small of a bear body as possible.
Day traders should be aware that Friday creates the potential for a big move up or down on the smaller time frames as traders decide on the close of the weekly chart.